1951-04-10

[Stage Direction]
Right Hon. L. S. St. Laurent (Prime
Minister): Mr. Speaker, in view of the question yesterday of the hon. member for Eglinton (Mr. Fleming) about the date of bringing down the report of the royal commission on arts, letters and sciences, may I say that I had a communication this morning from the secretary stating that April 20 was the date on which they had hoped to have it ready, but that in spite of their best efforts they have experienced some delays in the printing and it would be too optimistic to expect it on that date. He has promised to make every effort to expedite the printing, and as soon as it is prepared I shall be glad to place it before the house.


Right Hon. L. S. St. Laurent (Prime Minister):: In view of the applause which
greeted the announcement made by the Minister of Finance that he would bring down his budget tonight at eight o'clock, I trust I shall have unanimous consent of the house when I move:
That standing order 15 in relation to the consideration of private and public bills on Tuesdays be suspended for the sitting of Tuesday. April 10, 1951, so that the order for the house to resolve itself into committee of ways and means (budget) may be proceeded with at eight o'clock p.m.


[Stage Direction]
Motion agreed to.


Hon. Milton F. Gregg (Minister of Labour):: Mr. Speaker, on Friday last the hon. member for Hamilton West (Mrs. Fairclough) asked me a question, which is reported at page 1670 of Hansard, as to the organizing activities reputedly being carried on by the international union of mine, mill and smelter workers at Yellowknife and Port Radium in the Northwest Territories.
The union in question is known as the Yellowknife district miners union, local No. 802, of the international union of mine, mill and smelter workers, an organization which has carried on as an independent international union since its expulsion by both the Canadian Congress of Labour and the Congress of Industrial Organizations in the United States.
There have been contractual relations for some time between this union and the two principal mining companies in the Yellowknife area. One of these companies is Giant Yellowknife Gold Mines Limited, the management of which recently renewed its agreement with the union for the period from April 1, 1951, to March 31, 1952, through the process of direct negotiations. The other is the Consolidated Mining and Smelting Company of Canada, which has contractual relations with the union covering employees at its "Con" and "Rycon" properties, expiring in June, 1951.
Smaller mining operations are carried out in the Yellowknife area by Negus Mines Limited and Discovery Yellowknife Gold Mines Limited. These companies do not have collective agreements with any trade union, and the Department of Labour has no information as to any union organizing activities being carried on at their properties.
At Port Radium, much farther north, the only employer is the crown company, Eldorado Mining and Refining (1944) Limited, which carried out uranium mining and concentrating operations at La Bine bay on the east shore of Great Bear lake. In 1946 an attempt to organize the employees of this company was made, and an application for certification as bargaining agents was filed with the national war labour board by officers of the so-called Eldorado section of the Yellowknife district miners union, local No. 802. After conducting a vote, the board rejected the application for the reason that it was not supported by a majority of the employees affected. The Department of Labour has received no information that would indicate that there has been any union organizing activity at Port Radium since 1946, and there is no collective agreement with any trade union covering employees of the company's operations in the Northwest Territories.

Railways and Shipping-Committee
Collective bargaining does take place, however, in connection with the refinery operations of Eldorado Mining and Refining (1944) Limited at Port Hope, Ontario. There the production employees are covered by a collective agreement between the crown company and the chemicals division of the United Mine Workers of America.



PUBLIC ACCOUNTS


Mr. W. G. Weir (Poriage-Neepawa) moved:: That the name of Mr. Harkness be substituted for that of Mr. Macdonnell (Greenwood) on the standing committee on public accounts.


[Stage Direction]
Motion agreed to.


Hon. Lionel Chevrier (Minister of Transport) moved:: That a sessional committee on railways and shipping owned, operated and controlled by the government be appointed to consider the accounts and estimates and bills relating thereto of the Canadian National Railways, the Canadian National (West Indies) Steamships, and Trans-Canada Air Lines, saving always the powers of the committee of supply in relation to the voting of public moneys; and that the said committee be empowered to send for persons, papers, and records and to report from time to time, and that notwithstanding standing order 65, in relation to the limitation of the number of members, the said committee consist of Messrs: Benidickson, Bourget, Carter, Cavers, Clark, Foil-well, Fraser, Fulton, George, Gillis, Gosselin, Hatfield, Healy, Helme, James, Knight, Macdonald (Edmonton East), Macdonnell (Greenwood), McCulloch, McLure, Mott, Mutch, Picard, Pouliot, Thomas.
He said: Mr. Speaker, this is the usual motion to appoint the committee on railways and shipping to which are assigned for consideration and study the annual reports of Canadian National Railways, Canadian National (West Indies) Steamships, the Canadian National securities trust, the auditor's report, and the annual report of Trans-Canada Air Lines, together with certain of the estimates of the committee of supply which are withdrawn from the house and referred to the committee on railways and shipping for consideration.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, before the motion
carries, there are a few words that I should like to say. I heartily support the motion to set up the committee once again. Indeed it is rather an institution, and is almost a standing committee of the house by now. I should like to urge, however, that the committee in its study of the affairs of the

Canadian National Railways this year give particular consideration to the position of pensioners of that railway, and indeed the position of employees of the railway who hope that some day they may enjoy the pension benefits they deserve.
My remarks will be brief; indeed, most of [DOT]what I might wish to adduce by way of evidence can be found in Hansard of March 12 of this year at pages 1129, 1130 and 1131. On those three pages will be found quite a number of questions which I had placed on the order paper concerning Canadian National pension matters, together with the answers given by the Department of Transport.
I shall not take time to give all the minute details contained in those answers, but I should like to point out that there are 3,256 retired employees of the Canadian National Railways whose pension is only $25 per month. In addition, there is a small group of twenty-four pensioners whose pension was earned under a prior plan, and is an amount less than $25 per month. If one takes the answers to the various sets of questions contained on these three pages and does a little arithmetic, one will discover that there are 7,269 pensioners of the Canadian National Railways whose pensions amount to less than $40 per month. I will not give the results of the rest of the arithmetic I might have presented on the basis of the answers to these questions. I submit, however, that the time has come for an overhaul of the set-up of Canadian National pensions. That applies with respect to those now on pension; for, as with many others on fixed incomes, their position has become a very difficult one. It applies likewise to those still employed and contributing to various pension plans.
I know what the Minister of Finance (Mr. Abbott) says when we plead the cause of such people, the cause of superannuated civil servants and others, but I notice that in Votes and Proceedings for yesterday, the 9th of April, there is notice of a motion to adjust the pension position of a certain other group of employees of the federal government- namely, that of judges-and of judges' widows. No doubt the increased cost of living will be presented as a factor in that situation. If that is the case with respect to one group it is the case with respect to all groups. I plead in particular, because of the motion now before us, the case of pensioners and prospective pensioners of Canadian National Railways. It is not often that 1 quote the Canadian Pacific Railway Company as a good example, but I must point out that although it is a very small adjustment that the Canadian Pacific has made, that private company has recently made certain changes in its pension plan which

have the effect of boosting by stages the amounts of pension that retired employees of that railway may enjoy.
The Canadian Pacific Railway Company has also made provision for a supplement- it is a very small one-of $5 per month which it awards to pensioners whose pensions are in the lower brackets, until such time as they reach an age entitling them to receive the old age pension. My compliment to the Canadian Pacific Railway Company is not unlimited, because, as I have already indicated, I do not feel that it has gone nearly as far as it might have, but at least it has recognized the fact that modern conditions call for improvement in the pension plans affecting its employees. I submit that this applies also to the employees of the Canadian National Railways. I have argued from time to time, and it is still my view, that what we need in this country is a set-up similar to that in the United1 States. I have in mind the railroad retirement act in that country. I will not take time to give all the details, because I have done that on previous occasions, and have indicated the many ways in which that federal legislation in the United States provides much better pension arrangements than those accorded to railway employees in Canada. I still hope the day will come when our railway employees will have the benefits of a pension plan of that kind.
In the meantime-and I say that advisedly because we know how long it takes governments to move in these matters-it is grossly unfair that pensioners of the Canadian National Railways, numbering 3,256, should be drawing only the basic pension of $25 a month; and it is manifestly unfair that there should be 7,269 former employees drawing pensions of less than $40 per month. My questions put the bracket at $39.99, so that is the number of pensioners drawing less than $40.
I submit that in the light of present-day conditions; in the light of the fact that this is our own government-owned railway and that government institutions should be model employers and should be leading the way, the time has come when this whole situation should be overhauled, and there should be an immediate improvement in the pensions paid those already retired, particularly those in the lower brackets. There should be a change in the whole plan in order to improve the position of those who in future will become pensioners of the Canadian National Railways. I strongly urge that this committee go into this matter this session, and I would hope the result might be a report to the house that something should be done without delay.
Railways and Shipping-Committee


Mr. J. G. Diefenbaker (Lake Centre):: I
want to add just a word to what the hon. member for Winnipeg North Centre (Mr. Knowles) has said. On several occasions in previous years I brought up this matter with a view to removing the evident injustice that is being done so many of these former employees who receive only $25 a month. I suggest to the minister, as I have done on previous occasions, that the regulations under which this fund is administered contain many anomalies and injustices. I think of employees who, having worked on the railway for fifteen, eighteen or twenty years, are unable to carry on because of illness, and are denied any pensions. I think of the recent example of a man in Saskatchewan who after twenty-five years of service as a sectionman had to retire because of illness. He has nothing to show for those twenty-five years.
The pension regulations should be substantially changed and brought up to date. As I remember it, the basic pension of $25 a month came into effect some twenty-two years ago. At that time $25 had a far greater purchasing power than it has today. It was inadequate then; it is more than inadequate now. If I were a member of this committee I would endeavour to have this matter considered, with a view to doing something on behalf of these public employees. After all, the employees of the Canadian National Railways, a government enterprise, should be shown the consideration that is expected from private enterprise; and certainly $25 a month cannot be justified by any stretch of the imagination. When it is realized that more than three thousand employees are in that category it is hard to understand the attitude of those in authority in failing to revamp the act and the regulations in order to do justice in many cases where today injustice is being done.
I am not going into the matter at length today; I have done so on previous occasions. I have also dealt with the United States retirement act. I realize there would be difficulties in applying that act to Canada, but there can be no justification for the continuance of this system of pensions for men who give thirty and forty years to the public service, men in the lower income brackets, sectionmen, porters and so on, whose salaries do not permit them to make provision for their later years. With salaries of $150 and $175 a month it is impossible for these people to provide their own pensions. They give of the best years of their lives; and, even having regard to the economy we all wish to practise at this time, I am sure there could be no criticism if the injustices now being done these men were corrected.
1776	HOUSE OF
Railways and Shipping-Committee


Mr. Graydon:: May I ask the minister
whether it is his intention to bring before the committee this session the question of the debt structure of the national railways?


Lionel Chevrier: Mr. Speaker-


Mr. Speaker:: Order. If the minister speaks now he will close the debate.


Mr.  W. Chester S. McLure@Queens: want to bring just one matter to the attention of the minister. I am very proud to be a member of this committee, and I hope the resolution carries, but I would like to ask the minister when the committee will meet. I hope it will not meet during the week of April 23-28, because in the interests of true democracy I should be down in my province at that time, since there is an election coming up. I would ask the minister to see that this committee does not meet during that week.


Lionel Chevrier: Mr. Speaker-


Mr. Speaker:: If the minister speaks now he will close the debate.


Lionel Chevrier: It is not within my province to say when the committee shall meet, but if I have anything to do with it I can assure my hon. friend that it will not meet during the week he has to attend to important democratic business in his constituency. As the house knows, the committee is master of its own procedure, and when the organization meeting takes place it decides the time of sittings.
The hon. member for Peel (Mr. Graydon) asked if it was the intention of the government to submit to the committee the question of the capital structure of Canadian National Railways. I hesitate to repeat what I said on this subject during consideration of my estimates on Friday of last week, because the statement was lengthy and I am sure the house would not want to hear it again. I would say, however-and this applies to the remarks and representations made by the hon. member for Lake Centre (Mr. Diefen-baker), as well as those of the hon. member for Winnipeg North Centre (Mr. Knowles) -that members of the committee are free to bring up any questions in which they are interested. The hon. member for Winnipeg North Centre is not a member of the committee. He could become a member if he so desired; he is the whip of his party, and I presume would have something to say about who goes on a committee or who does not. But even if he is not a member of the committee, the members of the committee representing his party, as well as those representing the official opposition, may bring up any questions that are of particular interest to them.


To deal more specifically with the question of the hon. member for Peel I said the other evening that until such time as I was able to bring before my colleagues draft legislation dealing with the equalization of freight rates, and the government was able to approve that draft legislation for implementation at this session of parliament, I hope, I did not think it was possible to submit to my colleagues for their consideration the question of the capital structure of Canadian National Railways. However, if the members want to examine the president of the Canadian National or myself on the implementation of the plan, we shall be glad to give what information we can.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough West):: Will the Minister of Resources and Development say who gave exclusive picture rights to the national film board in connection with President Auriol's visit to Canada? Did those exclusive rights include the visits to the cities of Ottawa, Toronto and Montreal?


Hon. Robert H. Winters (Minister of Resources and Development):: To the best of my knowledge the national film board did not have over-all exclusive rights to the taking of pictures during the visit of President Auriol to Canada.


Gordon Knapman Fraser: Will the minister say whether the newspaper reports are wrong? They say that the newspapers were refused the right to take pictures.



OLD AGE PENSIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: I should like to direct a question to the Minister of Justice. Has the minister now received replies from all ten provinces to his letter of February 28 concerning the form of a constitutional amendment to make possible the implementation of the old age pension plan recommended by the parliamentary committee last year? What progress is being made in reaching agreement on this matter?


Hon. Stuart S. Garson (Minister of Justice):: The last communication which I had from the provinces reached me in the early afternoon of April 2. Later that same afternoon

I dictated the first draft of my letter to the provincial premiers arising out of the replies which I had received from all of them. In that letter I forwarded a further, and I hope final, redraft of the old age pensions amendment to the British North America Act, and also of the proposed provincial retail sales tax amendment. In those redrafts I endeavoured to incorporate the views of all the provincial governments so that the amendments would be acceptable to all provincial governments.


Stanley Howard Knowles: May I ask the minister whether, today or tomorrow, he could table this correspondence to appear as an appendix to Hansard.'! After all, this would be supplementary to previous correspondence on the same matter.


Stuart Sinclair Garson: I assume that these are going to be tabled in due course. So far as I was concerned, I had rather planned to wait until we got some replies and then table them all together.



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: should like to direct a question to the Minister of Justice in connection with a matter that came up last session, having to do with increasing the powers of enforcement in cases of alleged offences by drunken drivers. At that time he said he was going to communicate with the provinces. Has he communicated with the attorneys general, and if so, will he table their replies? Is it his intention to introduce at the present session legislation concerning drunken driving, and also to permit the use of chemical tests in the determination of intoxication?


Stuart Sinclair Garson: The subject matter to which the hon. member refers is one which, if it were dealt with, would be included in the Criminal Code amendments. The Criminal Code amendments which we have this year are an unusually large crop, and are more extensive than we have had for some years. In the department we have been conferring on them for some weeks. Just this afternoon I signed the final submission to be included on the cabinet agenda for its next meeting. Until cabinet considers these amendments I am unfortunately not in a position to answer the hon. member's question as to whether or not there will be legislation covering the subject matter of drunken driving. If and when such legislation is brought down, we shall comply with the other requests of the hon. member.
Inquiries of the Ministry If it is not brought down, the hon. member will have an opportunity to criticize us for not bringing it down when the estimates of my department are before the house.


John George Diefenbaker: Does the minister say he will not table the correspondence unless legislation is brought down?


Stuart Sinclair Garson: I do not think there would be any objection to tabling the correspondence. What I would suggest, though, is that I show it to my hon. friend, and then if he wants me to table it I shall be glad to do so.



POTATOES


[Stage Direction]
On the orders of the day:
Mr.  W. Chester S. McLure@Queens: On
April 5 I directed a question to the Minister of Agriculture. He was not present that day, nor was his parliamentary assistant. I thought that I might get an answer from him today, if he has looked at the question, which appears on page 1647 of Hansard for that day.


Right Hon. J. G. Gardiner (Minister of Agriculture):: That concerns the arrangements for marketing potatoes?


Mr. McLure:: Yes, about potatoes.


James Garfield Gardiner: I read the question, Mr. Speaker, and I am sorry that I did not answer it before. My memory is that the question related to what arrangements had been made with regard to marketing potatoes in the two provinces of New Brunswick and Prince Edward Island. The arrangement made is that marketing boards have been set up in the two provinces to market some 2,000 cars of potatoes that remain in surplus. It is suggested that they be marketed in two ways, first as table potatoes, and second to the starch factories.
So far as the starch factories are concerned, my understanding is that they have agreed to take delivery of potatoes at 60 cents a barrel, which works out at about 22 cents a bushel. They make a payment of that amount at the time the potatoes are delivered. Then there has been an arrangement to issue participation certificates upon which payment can be made at a later date. In other words it is a co-operative organization set up under the act of 1939, and we have guaranteed that the 60 cents a barrel can be advanced. We have also suggested to the provinces that we are prepared to make a further payment into the pool at a later date. This further payment will be limited to a certain amount which will permit a higher

Cost of Living
payment than the 60 cents to be made, but at the moment we are not in a position to say what that will work out at.
The boards will proceed to sell the potatoes at the best price they can obtain for them. Any amount which is obtained over and above the sale price to the starch plant and for table use, together with the amount that is paid in from the treasury here, will be distributed to the farmers who delivered potatoes.


Mr. Hatfield:: I should like to ask a supplementary question. Will the marketing board plan be carried out for the 1951 crop?


James Garfield Gardiner: I think, Mr. Speaker, the hope is that it will be, but that will depend, I suppose, somewhat upon the success the boards have in marketing the 2,000 cars in question.



TARIFFS AND TRADE


[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinton):: May I
ask the Minister of Trade and Commerce under what instructions from the government the Canadian delegates to the Torquay conference are working now with reference to the maintenance of imperial preference?


Hon. Douglas Abbott (Minister of Finance):: Perhaps I may answer that question. The head of the Canadian delegation is the chairman of the tariff board, Mr. Hector McKinnon. My information is that it is expected agreements will be signed with sixteen countries, and Canada will have a satisfactory agreement with the United States. Other than that, I am not in a position to make any statement at this time.



COST OF LIVING


[Stage Direction]
The house resumed, from Monday, April 9, consideration of the motion of Mr. Fournier (Hull) that Mr. Speaker do now leave the chair for the house to resolve itself into committee of supply, and the amendment thereto of Mr. Drew.
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, in the few minutes I had at my disposal last evening I read one or two extracts from Hansard in an effort to indicate the opinions of certain members of the government with respect to the value of price controls, subsidies and rationing under what we would term abnormal and emergency circumstances and conditions. Before proceeding, I just want to read one more extract

as further proof and thus further substantiate our continuing argument in connection with this most important question.
The hon. member for Winnipeg North Centre (Mr. Knowles) has been greatly interested in this question since the period of decontrol commenced in 1946. He placed a question on the order paper of February 25, 1947. I will read the question. It is as follows:
February 25-Mr. Knowles-Order of the house- For a return showing (a) the total cost of the government's price control program during the entire period thereof since the outbreak of world war II, together with a break-down of said total in such a manner as may be readily available, and (b) the amount saved by Canadian consumers as a result of this program, together with a break-down of this figure and an indication as to the basis used in computing the same.
For a considerable period, the hon. member did not receive a reply to that question on the order paper. From time to time he asked for information in the house as to when the question would be answered, and he persistently pressed Mr. Ilsley, then minister of finance, for a statement in connection with the question which had been on the order paper for so long, until finally Mr. Ilsley made in the house one of the most interesting statements that had ever been made by a minister of finance on such an important question. I wish to read briefly from the statement made by Mr. Ilsley on April 1, 1947, as reported at pages 1926 and 1927 of Hansard:


Mr. Ilsley:: . . . the hon. member for Winnipeg
North Centre (Mr Knowles) put a question and pressed me to answer it, and I will do this as best I can, although it is almost impossible to give an answer to the question He asked for an estimate of the benefits to the citizens of Canada as a result of the price control policies; that is to say, the saving in prices to the consumer-the amount by which consumer prices were made lower than they otherwise would have been.
The following estimate gives some indication of the strain and difficulty which would have developed in the Canadian economy without price control. It is based on the assumption that in the absence of price control prices would have risen in recent years to the same extent that they rose in world war I and its aftermath. Nobody knows whether they would or would not, or would have risen higher.


Mr. Case:: It is an impractical question.


An hon. Member:: Hear, hear.


Herbert Wilfred Herridge: To the hon. member who has just said "hear, hear", I might say that when the next election comes along the same thing may happen to him as happened to Mr. Case. I continue the quotation:


James Lorimer Ilsley: I wish to point out that we never
devoted more than fifteen per cent of our resources to the war in any year of world war I, whereas in world war II, in some years, we devoted approximately fifty per cent of the production of the country to the war. And economists have always told me that that is the main factor in driving

prices up-the proportion of output that you shoot away and send away, leaving in the country the purchasing power that was paid out to produce it, and nothing to spend it on. That is a powerful inflationary influence. It must be remembered that in many countries where there existed no effective control, prices were going up 100, 200 and 300 per cent, and I am not talking of wild inflations such as occurred in China and other places. But if we assume that prices would have risen, and the inflationary factors were more powerful in the last few years than in the years between 1914 and 1920, much more powerful-if we assume, I say, that prices would have risen, without control, just to the same extent proportionately, year by year, as they did in the period from 1914 to 1919, then these are the results you get: the consumers would have had to spend an average of nearly $8 billion between 1942 and 1946.


Mr. MacNicol:: How many millions?


James Lorimer Ilsley: I said nearly $8 billion a year between
1942 and 1946, to buy goods and services, which in fact cost them on the average not quite $6-5 billion a year. If hon. gentlemen want to know how that is arrived at they can procure table 11, gross national expenditure at market prices, 1938 to 1946, issued by the bureau of statistics, which shows the personal expenditure on consumer goods and services for each of the years from 1938 to 1946; and if the amount spent had increased proportionately to the increase in prices in the first great war, the amount spent would have averaged $8 billion in those years instead of the $6J billion which the consumers actually did spend.


Mr. Quelch;: Does that take into consideration the higher taxation?


James Lorimer Ilsley: No; it does not take that into account. Taxation was part of the stabilization policy.
We in this group recognize that.
High income taxes were probably the most powerful factor in the anti-inflation policy. In short, if prices had risen as they did in the last war and its aftermath, the consumers would have had to spend $1J billion more than they actually did.
It should also be noted that the general stabilization program held down the cost of munitions and other military expenses, thereby saving a further large addition to the already heavy national debt.
1 am sure that sentence will appeal to the Minister of National Defence (Mr. Claxton), in view of the statement which I understand he made at some public gathering quite recently. I continue:
It is estimated that government expenditures averaged $4 billion a year between 1942 and 1946. Without price control this cost might have been at the very least twenty-five per cent higher. I think that twenty-five per cent is based upon the other figures which I have given with regard to the additional percentage which the consumers would have been obliged to pay; and the stabilization program has thus meant a saving of another billion dollars a year. From these estimates it is possible to see that the cost of the control program was under $200 million a year, while the savings to the consumer purchasers and government as a buyer were on this hypothesis possibly $2J billion a year. The figures are tentative but do give some idea of the relative magnitude of the cost of and the savings effected by the government price control program.
Here we have, Mr. Speaker, from the highest authority-the minister of finance of the day, who had the portfolio during the greater part of the war period-proof as to the value
Cost of Living
of price control and subsidies in savings to the government and people, and definite proof as to the cost of those price controls and subsidies to the Canadian people. We have that on the highest authority. Yet, Mr. Speaker, in reading the Canadian papers recently, I note that one Liberal member of parliament gives as his reason for opposing the policy of price control and subsidies, and for supporting the government's policy in that connection, that price ceilings would be more costly than inflation to the Canadian people. I just wish to read from the Nelson Daily News of March 31, which reports a meeting of the East Kootenay Liberal Association at Cranbrook on March 29. It has this to say in part, in reporting the speech of the hon. member for Kootenay East (Mr. Byrne):
He supported the government in its stand against price controls establishment and its alternate policy of credit control to reduce buying power on the grounds that enforcement of resulting rationing and price ceilings would be more costly to the public than present inflation.
I presume that report is correct, because I read the same sort of report, in almost identical words, in the Cranbrook Courier of March 29. When the hon. member made that statement, I think he was unaware of the statement of the former minister of finance with regard to the relative cost of price controls and subsidies, and the savings effected for the Canadian people. For every dollar spent on price control and subsidies, according to the statement of the highest authority, the saving to the average Canadian consumer was between $12 and $13. Surely it is time the government acted in. this situation.
As I said before, I certainly am aware of its difficulties, its ramifications and the complications attending it under this system. But the government could act in the sphere of food, clothing and shelter, these three things that so seriously affect the lives of the people who have the lower incomes in this country. I am not personally concerned about the price of liquor, or the price of luxuries, or things of that sort. But I do think that this government should act in the field of food, clothing and shelter, and act now. If we are to protect the living standards of the families of this country, particularly of people raising families at this time, something must be done to protect those who are in receipt of fixed incomes, because they are in a very difficult position. I realize it is difficult to remedy the situation, and, shall I say, place them in a satisfactory position in relation to other groups in the community. We will have to roll back prices where possible after investigation. Those who are living on small pensions and fixed incomes find themselves in

Cost of Living
very difficult circumstances. Then there are those who are anxious to build houses. I believe the very foundations of democracy are built and maintained by people who own or desire to own their own houses. In my personal experience from dealing with people I have noticed that a change in the attitude of some men toward life takes place when they are able to build or own their own homes and have a little plot of ground around them to cultivate. These three things-food, clothing, shelter-should be given very serious consideration and action should be taken by the government now.
I realize that the present inflation is not all the government's fault. I think every fair-minded person realizes that. Some of it has been the result of human nature and of human greed. I know of many storekeepers who are very much perturbed by the constant rise in prices. They have shown me their invoices and have explained to me how much concerned they are about the situation. They know of its effect on their customers. But I know of other storekeepers who are storing supplies in their basements and are working havoc with prices just because they can take advantage of the Canadian people's circumstances at this time. Some manufacturers are raising prices unduly. There is no question about that.
Some manufacturers in this country have an excellent reputation, and are willing to accept a reasonable standard of profit. We realize that under this profit system a reasonable standard of profit is necessary if the system is to continue to function; but I know personally of individuals who have taken an exceptional advantage of present circumstances and shortages.
I come finally to the question of lumber. Lumber is a very important thing in this country in connection with the building of houses. There are lumber manufacturers in this country who have done their best to maintain a reasonable price throughout the difficult years; but owing to the competition for lumber from the United States, lumber prices have risen almost dramatically in the last two or three years, and to such an extent that at the present time there are thousands of Canadians who even a year ago were considering building a house, but owing to the increased cost of lumber, the increased cost of hardware and other things, are denied that opportunity and privilege at this time. I suggest, Mr. Speaker, that the government could well make certain that the Canadian requirements are met by a quota on the export of lumber, and establishment of price control on the lumber sold in the domestic

markets. The return from lumber sold to the export market is quite sufficient to secure for any lumber company an adequate profit in relation to the lumber they would have to sell on the domestic market. I think control of lumber is a very necessary step at this time.
I have made some investigation of the prices of lumber in this part of Ontario. I have heard references made to the prices charged by the lumber industry in British Columbia. I can say this in all truthfulness, and I am sure in this I shall be supported by other British Columbia members, that the prices that are charged for lumber in the city of Ottawa are simply out of this world as compared with the prices being charged for comparable grades in my own district of British Columbia.
I want to bring another thing to the attention of the; minister. I know a little about lumber grades. I have an interest in a little tinpot mill, and we grade very strictly. Everything that goes out of the mills in our district for export is good quality lumber and timber. I think that is generally the practice throughout British Columbia.


Mr. Gibson:: Like our apples.


Herbert Wilfred Herridge: The same as our apples. I think that all products sent from British Columbia are of good grade. But, Mr. Speaker, I was in Calgary last year and met a man driving a truckload of lumber. He was coming out of a lumber yard. I said: "What grade of lumber have you on there?" He said: "This is a load of No. 1 common." It was not a load of No. 1 common at all. It was a load of lower grades of lumber being sold as No. 1.
I think the government should do something to protect the lumber purchasers on the prairies, because in my opinion this overgrading has occurred out there in recent years. There is a dilution of lumber grades, when it reaches the prairie market, by a few wholesalers, jobbers, retailers, and so on. I should like to see the government give democracy an opportunity to function.
As I have said over and over again, this is a most difficult question. There is no overnight solution to it; but we in this group believe that if the government takes into its confidence organized labour of this country, the organized farmers, the representatives of the co-operative movement, the representatives of the consumers movement and some representative women, and these people are permitted to get around a table with representatives of the federal government, a great deal can be done under the leadership of the government, in co-operation with the

people's representatives and organizations to stabilize prices and improve this very unsatisfactory situation.
The cost of living index on March 1-not April 10-was 179-7. When the Canadian people read that in the papers it appalled many of them. Without doubt some minister's statements in previous months were an invitation to greedy people to raise prices, and without doubt some greedy people have taken advantage of the situation. The fiscal policies of the government and its credit restriction policy are not sufficient. That is evidenced by what has happened.
There are certain interests in this country who are against price control. The Canadian Chamber of Commerce has been consistently against price control, I think because it is aot in favour of any restriction or controls that appear to interfere with the operation Df free enterprise. The Canadian Manufacturers Association has been against price control consistently, and some of the lumber organizations throughout Canada have been against price control. I remember in March, 1947, the Western Retail Lumbermen's Asso-fiation made representations by letter urging ;he dropping of price controls immediately, when this government was following a policy of limited decontrol. In that letter they said something to this effect: If only price controls would be discontinued production would ncrease and the cost of lumber would drop. As a matter of fact production has increased greatly since that time, but owing to condi-ions in the external market and the demand 'or lumber internally, instead of prices Iropping, they have constantly increased.
For price control, or should I say a form of profit control, we have a majority of Canadians as indicated by public opinion polls. We have organized labour. Organized labour as a whole does not want wage freezing, but organized labour is in favour of price :ontrols and subsidies and is willing to ;o-operate with the government in order to Jo something to bring about a satisfactory relationship between wages and prices on ;he basis of negotiations and the practice of ;he principles of collective bargaining.
The organized farmers are in favour of price controls, necessary subsidies and regula-:ions of that type. They do not want price freezing, but they are willing to work in :o-operation with the government in the best interests of the country and in co-operation with labour to bring about a satisfactory relationship between prices and wages and ;o on. We have the co-operative movement .eaders expressing themselves as being firmly n. favour of price controls, subsidies and accessary regulations, and indicating their
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willingness to co-operate with the government. We have the veterans organizations. The British Columbia command of the Canadian Legion has taken a firm stand on this question, as have other veteran organizations. They are ready to co-operate. Then there are women's organizations and a large number of civil servants who are looking forward to the day when the government will take action.
If this government will only let democracy function and give the people the opportunity to participate, we can expect results. I know from experience that when a challenge faces the people they are ready to meet it. Things do not necessarily have to be smooth or easy. The government should give the people something to live for, and a worth-while purpose. This government can give the Canadian people something to live for by asking them to co-operate in developing a stabilized price structure in this country and a system of subsidies which will help to equalize the cost of living, help to equalize the burden now on the backs of the lower income groups by bringing about a more satisfactory relationship between wages and prices.
(Translation):


Mr. J. O. Gour (Russell):: Mr. Speaker, when I hear the opposition blame the government for the rising cost of living, I wonder if it could not be said instead that the Liberal government has so well run the country that we are enjoying an era of prosperity without precedent in history. Due to the markets the government has been able to find abroad for our products, the purchasing power of our people has increased substantially. This results in increased demand and, therefore, brings us higher prices for our products, higher wages, et cetera.
I would be tempted to twit the opposition about it, especially the official opposition; indeed, from 1930 to 1935, they showed so little capacity for running the country that they caused part of the people to go bankrupt. In fact the country was then swarming with unemployed, wages ran from 10 cents to 60 cents an hour, whereas today our workers are getting 60 cents to $2.50 an hour. Farm products were selling at ridiculous prices. Most farmers even lost the savings that had been put away for two or three generations while their income was barely sufficient to feed their families and pay their taxes.

Cost of Living
I have a few suggestions to help the government check inflation and lower the cost of living. It could be done by lowering the price of a wide variety of goods. My suggestions will not be welcomed and I trust that, if they are accepted, those who will suffer from them will not bear me too much ill will, for I make them sincerely.
In the first place, I believe that industrialists and businessmen should1 not be allowed to spend more than 25 per cent of the cost of a product for advertising purposes. I suggest that legislation to that effect would lower the cost of goods by something between 5 and 25 per cent, for the cost of advertising is really borne by the consumer.
I think an excess profits tax similar to the tax we had during the last war should be levied against all individuals, industrialists or others who, in the past four years, have had a taxable income of $5,000 or more, so that a 100 per cent tax might be levied on all incomes over and above the computed average for those years, and that they should be granted a reimbursement of 20 or 25 per cent in 1955 or 1956. Such taxation would curtail profiteering, force prices down, and bring substantial revenues to the government.
I believe we could also ask all our people, especially during 1951 and 1952-or as long as the world crisis prevails-to work from two to eight hours more a week. This would bring about a surplus of goods and consequently a lowering of prices which would benefit our working class and people of restricted means.
I am sure the government will take the best available means-and there are many-in order to fight inflation, which is disheartening to people of smaller means.
The new budget will be brought down tonight. I am sure the government has made the necessary provision for a sound administration of the country and that whatever regulations are made will prove satisfactory to all our people.
Unlike many hon. members of the opposition, I do not wish to put an end to prosperity in Canada. Our workers have more money and live in better homes than ever before. Farm buildings are in better condition than ever and the situation keeps on improving; we see new structures going up as well as community recreational centres, not to mention an ever-increasing number of new cars and new tractors driven by well fed and well dressed people.
I realize that, from time to time, the government must curb the ambitions of some people and bring them back to reason, but

nothing should be done to jeopardize the prosperity which, thanks to the present administration, our people have enjoyed since 1935. I therefore urge my leaders not to make the mistake of acting on the advice of those who, from 1930 to 1935, handicapped the development of Canada.
(Text):


Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, I think it would be natural, having regard to the speech delivered last evening by the Minister of Trade and Commerce (Mr. Howe), that I begin my remarks by referring to what the minister said. I must confess that in part the speech was a great surprise to me. I listened with much interest to the minister's account of various proceedings which are being carried out by his department, but when he came to the end of his speech he used words which I imagine were a surprise to a large number of people in Canada who think they are suffering at the present time. The minister said, as reported on page 1762 of Hansard:
I am sure that we can get along quite comfortably as consumers and still engage in a substantial defence effort.
And a little later:
Unless all-out war comes, Canadians can continue to live well.
Now, I listened to that and I said to myself: What are we talking about? Is there really any rise in prices at all? Yes, the ministei indicated that there was a rise. At page 1758 of Hansard he said that prices had gone up about 16 points or 10 per cent, and I think that is roughly within a year. When I read this I could not help wondering what would be the feelings of the people of whom the hon member for Hamilton West (Mrs. Fairclough' spoke last night. Incidentally, I think thf hon. member for Hamilton West can speak with a particularly strong title for the housewives of Canada as she herself is not only ar efficient member of parliament but also ar efficient housewife. When we heard what she had to say it was certainly most difficul' indeed to -square it with the words of tht minister which I read. Indeed it seems tha' when the minister speaks about this matte: he is able to maintain an attitude of detachment, almost as if he were an onlooker.
I leave that and come back now to what ! think is the feeling of the great mass of th< ordinary people, the people who really believf that they are suffering seriously. I thinl these people, and indeed a very large numbei of the population of the whole country, havinj regard particularly to what happened in th< month of February', believe that we have ai inflation which is at any rate giving a verj

good imitation of being a runaway inflation. I was pleased to hear the minister say that the month of March had apparently flattened out but we must not take too much comfort from that because, after all, it is not as if at the present stage of costs we should be content to go on as we are. There has got to be something much better or people are going to continue to suffer in a way which is extremely hard for them to bear.
The thought of inflation and what it does reminds one of a remark of Lenin which I believe Stalin is in the habit of quoting often, that the way to destroy a capitalist country is to debauch its currency. When those in Moscow watch what is going on here at the moment, and what has been going on for some months, it seems to me that they will be chuckling a bit and saying: Well, these people are trying to get ready to meet us in the field but if they go on as they are now, managing their affairs as badly as they are now, it may be that they will destroy themselves, or at any rate weaken themselves to the point where their defence effort will be utterly blunted. It is interesting to note that the Minister of National Defence (Mr. Clax-ton) in a speech he made in New York the other day was uttering what almost sounded like a signal of distress by reason of the fact that high prices were indeed blunting his defence production by increasing -costs so enormously.
One would -have reason to worry about this matter much less if we were in the full swing of our defence expenditure, but we are told that we have only made a good beginning. I did not see this in print but I was told the other day that Mr. Harris, the steel controller, speaking from where he sits, said that we really would not be under a full head of expenditure for about a year. The minister will correct me if I am wrong on that, but that was reported to me, and it makes me feel that the present situation gives cause for just that much more anxiety. It makes one feel that, even if March has flattened out, the pressures still to come make the whole situation full of danger.
Why are we in this trouble if defence expenditures are still at a comparatively early stage? I want to ask also whether it could have been averted. I think a good deal of it could have been averted, and I shall try to say why. I suppose there are two main reasons why we are in this difficulty now. The first is, as the minister said last night, that we have had bad public psychology. People have been running to cover, people have been hoarding. Anticipating higher prices a great many people have bought goods, I am afraid, speculating for a rise. The minister is somewhat tired of
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hearing his own remarks quoted on that point, but he made it very clear when he said that people were "governing themselves accordingly". What he said was that people, anticipating and fearing that some kind of controls might be put on, were "governing themselves accordingly"-in other words, buying up commodities.
Human psychology is one reason, and there I think we are fully entitled to blame the government. The hon. member for Kootenay West (Mr. Herridge), who has just spoken, called for a lead from the government. I thought some of his remarks were quite sound, and that we do need a lead. I feel ever so strongly that the government has not taken the lead.
When we met in this chamber last September the leader of the opposition (Mr. Drew) and others pressed very strongly that the government should say whether or not there was an emergency. The government hesitated to do so, and I think that people have hesitated to believe that the situation is as serious as the actual figures show it to be. I think that remark also applies to the -situation in Korea. It is quite astonishing how we have dissociated ourselves from the happenings there, which are tremendous, even though at the present time they seem to be in a lull.
The next cause, and a very active material cause for what has happened, is that there has been what I call a gross failure on the part of the government to use the financial controls that are available to it, particularly through the Bank of Canada. The Bank of Canada was set up for the very purpose of giving the government an effective agency to control credit. I shall try to show the house in the course of the next few minutes that in this respect there has been a grievous and inexcusable failure. I think it is desirable that the public should know the causes of the present situation. As a matter of fact if people know the causes there will be some occasion for them to take heart and say: Well, if those causes are met we may have a better hope for the future.
As the leader of the opposition said some weeks ago in the house, there is a terrible feeling of insecurity abroad. I would say that this insecurity has invaded the minds of all but the well-to-do-and perhaps even the minds of many of them. Second, those who have wage contracts with automatic cost of living escalator clauses may feel that they can escape, and third, those who are so well organized that they feel they can have their wages keep pace with the cost of living. These three classes might to some extent escape the prevailing sense of insecurity

Cost of Living
although I suggest that as things are going now none of them will feel secure because they surely will realize that if this thing goes on and is not checked it will undermine, as the minister said last night, the very foundations of our society.
This situation demands qualities which are hard to summon up in peacetime. There is no doubt in the world that it demands energy, activity and all that kind of thing, but it also demands a certain forbearance. It also demands that people should not try to tread down other elements in the community regardless, and think only of their own welfare, because if that prevails in the end they will be dragged down also. It is easy to describe the disease. It has been described so often we are tired of hearing about it. It is the case of "too much money chasing too few goods". It is easy to describe the cure- "more production and less consumption". That is easily said, but I have here an epigrammatic statement made by a competent economist from which I propose to read because I think it puts in simple words very pertinent advice which we should all bear in mind, and which could have a very practical influence on the situation if we would really bear it in mind. He said:
If when I get a larger income in dollars for myself I produce at the same time correspondingly more than I produced before, this will not raise my neighbour's cost of living.
But as often as I get a larger income without at the same time producing correspondingly more than I produced before, my success in getting more income for myself must raise my neighbour's cost of living.
And in parallel with this, whenever my neighbour gets a larger income in dollars for himself and at the same time enlarges his own output correspondingly, he will not raise my cost of living.
But as often as he gets a larger income without at the same time producing correspondingly more than he produced before, his own success in getting more income for himself must raise my cost of living.
I suggest that there is a lot of practical common sense in that, and if by some, magic we were all able to realize the force of that statement and practise it, that in itself would go a long way towards solving the problem. I suggest also that governments, by wise instruction and wise leadership, could do a great deal to make that view prevail.


Mr. Coldwell:: Will the hon. gentleman say who wrote that?


James MacKerras Macdonnell: Yes; Gilbert Jackson, who I think is one of the most earnest students of economics. I think we can also say, and I imagine everyone will agree with this, that civilian demands must be reduced through economy of expenditure by governments, businesses and individuals.
[Mr. Macdonnell (Greenwood) .1
We must have higher taxes; we must have credit restraints; we must have control of scarce commodities. As a matter of fact the minister referred to this very thing last autumn. I should like to read just a sentence from what he said when he actually spoke of controlling prices. Apparently there are some people who feel that even to suggest such a thing is hardly done in respectable circles, so I want to read to the minister part of what he had to say at page 458 of Hansard for last September. Speaking on the Essential Materials (Defence) Act he said:
The purpose of the measure is to try to see that war buying is not permitted to be a factor in increasing prices. In other words, if for war purposes we shorten the supply of materials and the remainder is insufficient for domestic supply, we then take the right to fix prices on the materials for domestic use, and arrange distribution.
To me that seems sensible. That seems to recognize what is actually happening, that purchases by governments have upset and are upsetting the ordinary operations of the market. The other day we read that the United States, which had been stockpiling tin, brought down the price of tin by a very substantial amount in one day by ceasing its operations. That shows the effect actions by governments are having day by day on the markets.
Of course it is commonplace to say what we all agree with, that production is all important. I suppose we could easily have a calculation made to show that if by some comparatively small percentage, probably less than 5 per cent and perhaps only 2 or 3 per cent, we could increase our production each day, our problems would largely disappear. Unfortunately that realization will never get abroad while we are utterly unconscious of the fact that we are living under stress, that there is a real emergency, that we are in real danger, the kind of danger which in wartime made us all prepared to do for our country more than we would ordinarily do. I believe enough in human nature to feel that if the people could be made to realize the urgency of the situation, much could be done in that way. But as we listened last evening to the Minister of Trade and Commerce (Mr. Howe), interesting as he was; as we have listened to the Prime Minister (Mr. St. Laurent); as we have listened to the Minister of Finance (Mr. Abbott)-and of course we shall hear more from him tonight on this subject-one gets the impression of people who are onlookers. One almost gets the impression that the government has become so complacent and so pleased with itself that it really feels that nothing very much can be wrong as long as it is in power. That is a very pleasant

belief, but it does not just cover everything. I would say also that these signs of complacency have existed even since last September, even since the time when I think it became perfectly clear that we were in an emergency and should have acted accordingly.
I think we saw that attitude exhibited in this house the other evening when this debate was suggested. When the figures for February were quoted the Minister of Trade and Commerce said after all they were five weeks old, and for that reason there was nc urgency about debating them. I could not understand what the minister meant, unless he felt that people had been so numbed by those figures for February that they really had no power of feeling left. Then we heard from the genial Minister of Public Works (Mr. Fournier) who told us there was no use having a debate because nobody would pay any attention to what we said. Those were not his exact words-


Mr. Fournier (Hull):: I would not interrupt when the hon. member was speaking.


James MacKerras Macdonnell: I would not for the world say anything unfair about the minister, but I think I can get fairly close to his words. He said, "What is the use of talking about this, because you will not have any influence on the government."


Alphonse Fournier: At that time.


James MacKerras Macdonnell: Let me
finish and later you may correct me; that it would not have any influence on the government, or at any rate not in time. I had a feeling the minister was doing a good deal, perhaps unintentionally-though he is a good fellow, so it may have been intentionally-to underline what we have said here time and again, that the government does not consider parliament as seriously as we would like it to. As a matter of fact the minister's words created a very curious effect in one quarter. His rather contemptuous reference to the power of debate-though I did not take it in any personal way, and I do not think he meant us in the opposition to take it in that way, since I understood he was just speaking in general-prompted somebody to say, "What does the Minister of Public Works want the opposition to do; put on a floor show?"


Alphonse Fournier: That would be a
change.


James MacKerras Macdonnell: I will not give the Minister of Trade and Commerce a chance to say that is what we are doing. Then of course we had the Minister of Finance, who did not want this debate to take place either. I can sympathize with him, too, because in a way we are muddying the
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water for him tonight. This is like a kind of trial trip for his speech this evening. He has already given us a little preview of what may come by using that interesting phrase "world-wide phenomenon of inflation". I take it we can infer from those words that the minister's line this evening is going to be: yes, there is a little inflation, but it is all over the world. It is a phenomenon; that is, it is a kind of act of God, and no man has anything to do with it. Then no doubt he will go on and tell us how bad things are in the United Kingdom; and they are having troubles there. He will tell us how bad they are in France. Then he will go to the United States, and when he is through we will have the good old ending that really things in Canada are so good we ought to be thankful to this all-wise government for protecting us from all the evils from which the rest of the world is suffering.


Stanley Howard Knowles: The government treats all problems as either provincial or international.


James MacKerras Macdonnell: I think we should admit at once that foreign events do have some influence, but I want to stress the fact that we have far more power over ourselves than foreign events have over us. I would remind the members of the government who are here how often in past years we have been told of the wonderful lead we have given other countries, how the United States had to come and sit at the feet of this government to learn how to do this, that and the other. But now the talk seems to be all in the other direction. I propose to show as clearly as I can what I regard as the most damaging, devastating negligence on the part of the government, particularly the finance department, in respect of financial controls especially since last September. But I must give them credit for one thing. The propaganda machine is already at work. I read this statement, which I assume to be inspired. It was not marked "paid advertisement". There was nothing to indicate that it was, but I inferred it was inspired. It reads:
Canada is now leading the world in a unique program aimed at getting to the roots of the age-old problem of inflationary cycles.
Upon reading this article further, you find that somewhat grandiloquent expression really means that after months and months of delay the finance department and the Bank of Canada pulled themselves together, and they have suggested to the banks- "suggest" is not a strong enough word, but that is used because they do not like to use the word "power", and they have plenty of power-that there should be a curb put on lending. I believe it is desirable that there should be a curb put on lending.

Cost of Living
Lest I forget later, I should like to point out that some of this lending to which I am going to refer assisted a good deal in that very process which the minister described some weeks ago when he was telling us how difficult it was to do anything in the matter of controls, because really the horse had got out and it was too late. I refer again to the people who are "governing themselves accordingly", and one of the things that helped them to buy was the fact that loans were being rapidly increased by the banks. Many times in this house we have talked about the effect of the supply of money on prices. I am not going to weary the house with long lists of figures. The figure which has often been used is that in the last twelve years the amount of money has gone up roughly four times, and the amount of goods has gone up roughly twice. I am not suggesting that means that you do a little sum in arithmetic, and say therefore prices have doubled. It is not as simple as that. On the other hand no one who has seriously thought about this matter doubts that the quantity of money which is in existence has a great effect on prices.
I wish in some way I had the capacity to make the ordinary taxpayer feel that this interests him; that this is not just a matter of millions and tens of millions of dollars, which are figures put in bank books and discussed by ministers of finance. I wish I could convince him that what happens when newly-created money comes into existence is that that money competes-I am almost quoting now from the budget speech of 1939 made in this house- with the existing money. I shall give the igures in a moment as to what happened last autumn. I do want to get this across, that when hundreds of millions of dollars of new money come into existence they compete with the old money. New dollars, however, look just like the old dollars. In the old days when they debased the currency they did it rather more honestly by clipping bits off the coins. You could see what was happening. The coins did not look right. Today we make new dollars that look like the old dollars. While we are diluting and debasing the currency, it is difficult for an ordinary person to observe it.
I want to say something else about this huge increase in money which happened last autumn. I want to make it clear that any banker who is in business must make loans to credit-worthy borrowers. It is not for him to say that, as a matter of general policy, there has to be credit restriction; that is a matter for the government. I believe that was the prime reason, or one of the prime reasons, for the creation of the Bank of Canada.

I should like to go back for a moment to last September; because last September we in the opposition did our best-the Minister of Public Works (Mr. Fournier) says we do not have much effect-to create a sense of urgency. Indeed, we liked to think we did have some effect, because the Minister of Finance (Mr. Abbott) used words which sounded all right. We had no reason to think he was not going to do anything about it. He said that what we require is a "prompt and effective anti-inflationary program." Now, that sounds all right. I could not improve upon those words, and I doubt if anyone could. They express exactly what should have been done. What did he do? I would say that, as near as makes no difference, he did nothing until February.


Gordon Graydon: He unhitched the horse and let it run away.


James MacKerras Macdonnell: I shall
accept what the hon. member for Peel said. Let us look at what began to happen last September. Let us take bank loans. Members will be familiar with the fact that current loans in banks can be made and new money is created; that is quite proper provided that the banks ratio of cash is maintained. What did we do in September? Bank loans were $2,294 million then, and by the end of the year they were $2,651 million, a rise of $350 million. Then they went up roughly another $50 million by the end of January. You had, therefore, something in the nature of 400 million new dollars coming into operation and competing with the old dollars. During that time, let me remind you, we had a rise in the cost of living; while that $400 million of new money was coming into circulation, the cost of living went up. First of all it went from 170 to 172, then in January from 172 to 175. As I have already pointed out, that is not the whole story, because that new money facilitated the process which the minister described as governing themselves accordingly.
I must say, though the Minister of Trade and Commerce will know how much I dislike criticizing him, that the words he used when he explained that people had been governing themselves accordingly, disclosed the facts. As was said yesterday, I think that was almost an invitation to inflation. At any rate, I cannot see how else it could have operated except to make people say:	We
better keep on just the way we have been operating; the minister says we are governing ourselves accordingly and he seems to think that what we are doing is the natural reaction to the circumstances, so perhaps we had better continue.

This monetary policy of the government did not begin last September. Oh, no; it began long before that. I shall say just a word about it. I have said it before, so I shall make it very brief. During the war, of course, there had to be inflation. I have never hesitated to say that I think the finance department did many good things during the war. But when we came to the peace in 1945, they produced a memorandum which was to take care of the depression, which I must admit most people feared at that time. I think that memorandum in 1945 was a proper memorandum and a useful memorandum. The only complaint I have is that they used that technique, which is designed for a depression, year after year for what in any man's language was a boom. The Winnipeg Free Press, which is often quite favourable to the government, referred to it as a big blunder. What they meant by the word "blunder" was the fact that the tool which was designed for one purpose was used for exactly the opposite purpose.
As I say, that was continued year after year. We tried, in our simple way, to bring attention to that, and suggested it was not sound. We suggested it was creating an artificial stimulus and was driving prices up, even at a time when we were not in fear of war although perhaps we should have been.
Even if last September, when the pressure was on, the government had acted, we would have been inclined to forgive them. But it seems as if they were steeped in what I can only call this expansion mentality, this control mentality, in the belief that somehow or other we had plunged into a new world where the finance department were going to control us in any way they liked. Nothing was done. I quote from the Free Press of September 9, which says:
The weakest aspect of the budget is undoubtedly the measures proposed to counteract inflation.
Instead of having used the phrase I quoted a little while ago, the minister took it rather lightly. He insisted on calling the inflation incipient, although the cost of living then had quite recently risen-within recent months-about eight points.
I think in retrospect I can see exactly what happened. When we were here in September we were anxious about the fighting in Korea; but hon. members will recall that immediately after that the military situation greatly improved and indeed the fighting lulled and almost died away. I am just as sure as I am of the fact that I stand here that what happened is that the government, which had been extremely doubtful as to
Cost of Living
whether there was a real emergency in September, had decided by October that there was not any emergency, that they were off the hook and that they did not really need to take any great action.
The best proof of that is that things jogged along and on February 8, just about two months ago, I asked the Minister of Finance about what was happening with regard to credit controls, whether anything was being done to curb credit. The minister then treated me rather jocularly. I say "jocularly", because I am quite sure the minister was aware of his powers; but the language he used was strange. He asked me if what I was proposing was that the Bank of Canada should scrutinize the loans of individual banks. I said no, that I was not referring to that. Later on, in a speech which the minister made, he referred to this matter again jocularly, as something which was really an absurd suggestion. I was then able to read to him from the evidence of the governor of the Bank of Canada given before the prices committee in 1948, indicating that in 1948 the bank, as the government instrument-very tentatively, I must admit, and very temporarily, I must admit- had done this very thing. In other words, it suggested to the chartered banks that loans should be to some extent discontinued. Oh, yes, they had to be discontinued for capital purposes at that time, or at any rate there was to be retrenchment.
Then again, some days later, I pointed out to the minister that there had been a report that the governor of the bank had called together the general managers of the chartered banks for this purpose. Again the minister treated the matter in what I thought was a rather curious way. He really brushed it off by saying yes, it was true that the governor of the bank had had a routine meeting with some of the general managers of the chartered banks; but as a matter of fact, when he referred to the meeting as routine, he was not quite doing it justice because actually what they discussed at that time, as reported by the governor of the bank itself, was this. They concluded that "what was now required was a definitely restrictive approach to the whole question of credit expansion." It will be seen that in effect, perhaps under our urging-at any rate, after we had raised the question-this point was taken up and dealt with in a practical manner. But all those months were lost. Incidentally, when the minister talks this evening, I hope he will not suggest that these are matters which are international or world-wide phenomena. I hope he will

Cost of Living
not try to suggest that a great error and a deplorable piece of neglect was not practised at that time.
There is another matter which is another of the chickens that are coming home to roost; because, Mr. Speaker, the results of this policy have been long averted, long delayed, but they were always inevitable and they have come at last. Let us look for a moment at the question of bond prices. Tens of thousands of people-yes, I suppose hundreds of thousands-in this country are now greatly outraged because they find that the bonds which they bought probably at 102 or 103 are now selling perhaps at 97 or 98. They are inclined to blame the government, and in one way I think they are quite entitled to do so; because when these low rates-which were then not so familiar and not so acceptable-were offered, as a kind of sweetener- the inducement-it is hard now to find out exactly who said it-was undoubtedly held out: "Yes, the rate is low, but at any rate you will always be able to get par for your bonds." Of course those abnormally low rates penalized thrift. They made it extremely hard for people who were trying to provide their own security, the very people who ought to be encouraged.
But at any rate, I come back now to the question of this assurance or alleged assurance which got around. The extent of this belief was incredible. I remember that in January, 1948, when there was a temporary flurry in the price of these bonds, I ran into a rather senior and well-informed investment dealer-I should say that he had been in Ottawa for a time during the war and perhaps had absorbed a little of the control mind. I said to him, "I see some sign of the bond market finding its own level." He said, "Well, of course it can never go below par." I said, "Why not?" "Well," he said, "the reason it could not go below par is that the Minister of Finance said so." He meant Mr. Ilsley. I do not believe that Mr. Ilsley ever did say such a thing; but I believe that that assurance was in the air; that it was allowed to become widespread, indeed universal; and that nothing was ever done to disabuse people's minds of it. Indeed I go further and say that I am much afraid that in those days there was a feeling that somehow or other interest rates could be controlled in such a way that bonds at any rate would not go below par.
One other form of credit control I want to mention is control of instalment buying. We passed a measure with regard to that matter last autumn; but anything that was done at that time was a mere gesture, a mere token. I have not been able to find anyone

who thought it has been the least bit effective; and the best proof that it was not effective is that within recent weeks we have had new buying controls, with much more effective teeth put in them.
There is another control which might have been effective, and that is the government's own control of its expenditures. Again, so that there is no danger of my being unfair, I will read what the Free Press says about this aspect. The Free Press of March 16 said:
The federal government's estimate of expenditure in the next fiscal year shows clearly that economy as a weapon against inflation has failed. The government has sharply reduced its expenditures in various departments, but these savings are almost entirely counterbalanced by increases elsewhere. Thus, apart from defence, the government's total expenditure in the next year will show a reduction of only $35 million . . . Rising demand for goods and services will soon exercise a new and powerful inflationary influence.
I now come to the question of commodity control. I have already made reference to what the Minister of Trade and Commerce (Mr. Howe) said about it last autumn. My feeling is that he too, like the Minister of Finance, suffered from the Korean malady, that he thought they were off the hook, and that he did precious little about it. He gave us last night some instances of things they had done; but they did very little indeed to alter the situation.
I suggest that it would ameliorate the situation if the government were prepared to confess their mistakes and to promise to do better, in order to give people more hope. But I have great doubt whether any such practice will be followed by the Minister of Finance this evening. Indeed, I have already indicated that I have no doubt we shall have the full explanation that everything possible has been done by the government.
I now want to say just a word or two in closing, Mr. Speaker, to review the remedies which I have already mentioned, and I want to say this. In what I have said and what I shall say I do not feel that I have changed my principles in any way. I have just as strong a feeling that free enterprise should be allowed to govern, but I think that in a world where governments have stepped in, as they have stepped in, to suggest that we can carry on as if none of these things have happened is to suggest something doctrinaire.
I have already instanced the case of government stockpiling. I have mentioned the example of tin, but there are many others. I refer again to what the Minister of Trade and Commerce (Mr. Howe) said on September 8 last, namely, that in the case of commodities

which were being bought in large supply by the government for defence purposes he would control both price and allocation.
I refer again to the measures which should be used, namely, higher taxes, economy on expenditure by government, credit restraint and control over scarce materials. On this last I want to say a further word. I want to quote from two quite different authorities who mentioned this as one of the measures which could be used. My leader has said, and I wish to reiterate, that we are not suggesting any rigid return to methods of the past. Indeed we believe that government should have learned something in those last years. What we want is something flexible and sensible. Those two authorities follow in a way the general lines indicated by the minister himself last September. The first person I wish to quote from is Mr. Rhys M. Sale, president of the Ford Motor Company of Canada, who is now, I believe, assisting the government on some committee. He said this:
As was apparent in the second world war and has already been indicated in the United States in this crisis, the easiest way to ensure adequate supplies of a critical material for military purposes is to deny its use for civilian consumption. By far the better way is to apply every means to create more of the critical material so there will be enough for both military and essential civilian use.
My next authority is an American by the name of Slichter who has a practical and sensible article on the subject of inflation in the April issue of the Atlantic Monthly. He makes a remark pretty well along the same lines. He said:
An effective way of discouraging the demand for consumer goods and thereby limiting inflation is to prevent industry from making the kind and quality of goods that consumers desire to buy. Price ceilings as I have pointed out do this to a certain extent, though that is not their purpose. A more effective restraint on consumer demands, however, comes from restrictions on the use of scarce materials.
I have just one further point I want to make-in this I find myself agreeing with the minister-and that is that we should not leave everything to the government. I agree with him that consumers, labour unions, farm organizations, businessmen, everybody should be prepared to carry some responsibility. But they have got to have a lead, and up to the present there has been no lead at all. I would say absolutely none but a few amiable admonitions in the speech of the Minister of Finance (Mr. Abbott) last autumn and an occasional amiable admonition from this or that minister as he goes about the country. That is no good. The government has done nothing to convince the people that they are serious about all this. They will have to convince themselves that 80709-114
Cost of Living
they are very serious before they can carry the conviction to the ordinary citizen. They ought to be able to convince them. Surely, it is not for want of propaganda machines that they cannot do it. If all the propaganda machinery which spends its time lauding the government were turned in on an intelligent plan to try to organize the citizens up and down the country, to make clear to them how they can co-operate, to make clear, perhaps to the housewives, better methods of buying when this or that commodity is scarce, all these things would help, and none of these things has been done.
How much better it would be if the Minister of National Health and Welfare (Mr. Martin), instead of sending out circulars telling us what we should take with us on picnics, were to put out his circulars advising people how to conduct themselves in this world situation-


Mr. Deputy Speaker:: Order. I am sorry to interrupt the hon. member, but he has exhausted his time.


James MacKerras Macdonnell: May I have fifteen seconds?


Some hon. Members:: Go ahead.


Alphonse Fournier: Go ahead.


James MacKerras Macdonnell: I just want to ask this question. Is it an accident that apparently we are the only civilized country which is not trying to take steps in these circumstances? I cannot believe it is. And although my expectations for what is to be said tonight by the Minister of Finance were a good deal chilled by what the Minister of Trade and Commerce said last night, nevertheless I am going to allow myself to hope until eight o'clock that we may have some indication that after all the hesitation, that after all the delays which have cost us so much, finally the government will act.


Mr. W. J. Major (Glengarry):: Mr. Speaker, may I offer a few figures on prices as I find them on my records and which are actual? Knowing that the farmers are struggling hard to keep up production, I want to offer a few facts at this time. I could use any of the branches of mixed farming to illustrate my point, but as I had the opportunity of taking figures from my records during the week end I will deal with a commodity upon which I have the most data at this time.
To show my point, I have prepared tables covering from 1942 to 1951 showing the relation between prices received during that period as well as some of the costs.
First let me give the price per dozen of grade A large eggs received by the producer

Cost of Living
at the farm, and I will quote the highest and lowest price received during the year, striking the average which relates very closely to the actual average, depending on quantities:
	High	Low Average	
1942 	[DOT]31	[DOT]401943 	
-50	[DOT]35	[DOT]421944 	
-46	[DOT]33	[DOT]391945 	
-48	[DOT]31	[DOT]391946 	
-45	[DOT]31	[DOT]381947 	
-48	[DOT]34	[DOT]411948 	[DOT]41	[DOT]511949 	[DOT]37	[DOT]421950 	
-62	[DOT]21	[DOT]411951 January 	
-41	[DOT]35	[DOT]38February 	
-57	[DOT]41	[DOT]49March 	
-52	[DOT]48	[DOT]50
The average for the first three months of 1951 was 46 cents. You will note, Mr. Speaker, that the average price paid the producer in January, February and March of 1951 is really 10 per cent lower than the 1948 average. You will also note the disproportionately low price to which eggs declined in 1950, namely, a low of 21 cents a dozen.
I remember that about that time I was coming home from Toronto and I had a meal on the train consisting of an omelette and other things. When I reached home I found that I had paid out the equivalent of nine dozen eggs for that meal.
Let us make a comparison of some of the costs as related to the figures quoted in order to find the basic feed cost to the producer in the same period. I should like to indicate the cost of feed wheat per hundred pounds to the producer from 1942 to 1951. The figures which follow indicate the high, the low and the average and they are:
High Low Average
1942	
$1.95	$1.65	$1.801943	
1.90	1.75	1.821944	
1.80	1.75	1.771945	
1.90	1.80	1.851946	
1.90	1.80	1.851947	
2.95	1.90	2.421948	
3.80	3.00	3.401949	
3.75	3.35	3.051950	
3.60	3.20	3.401951	(first three months) ______ 3.65	3.35	3.50
In 1942 laying mash to the producer was $2.40 per hundred pounds, whereas in 1951, it is $5.25 and over. It will be noted that during the period 1943 to 1951 the price received for grade A large eggs by the producer increased only by 9 [DOT] 5 per cent, while the cost of feed wheat increased 92 per cent and the cost of laying mash by over 100 per cent. There is another fixed cost which is overlooked. I refer to the electricity supplied by the hydro at cost. The hydro commission have had to increase their rates. I have a class F contract under which I was supplied power in 1944 at the graded monthly rate of 80 kilowatt hours at 4 cents, 240 kilowatt hours at 
1-6 cents and the balance at | of a cent. In 1947 the graded rate was changed to 260 kilowatt hours at 3-5 cents, 780 kilowatt hours at 1-6 cents and the balance at f cent. In 1950 there was a further change to 260 kilowatt hours at 4-4 cents, 780 kilowatt hours at 2 1 cents and the balance at 1-1 cent.
For the purpose of calculation let us use the same figure, and for easy computation let us put it at 2,000 kilowatt hours per month. Under the 1944 rate the cost would be $19.64; under the 1947 rate it would be $28.78, and under the 1950 rate it would be $38.38. Thus it can be seen that the cost was increased by 46 per cent in 1947, and by a further increase of 33 per cent in 1950 over 1947, or a total increase of 95 per cent in 1950 as compared with 1944.
After reading the table dealing with egg prices from 1942 to 1951 it will be noted that the producer is not receiving as much of the price paid by the consumer as one might be led to think by reports released on the cost of living index. To the price received by the producer for his eggs must be added some 15 to 18 cents per dozen to cover the cost of and profit to the grading station, the wholesale dealer and the grocer who sells them over the counter.
Before a decision is reached to establish price controls of necessity the prices of farm produce would have to be stabilized and all other prices and wages controlled accordingly if you did not want a further reduction in farm food production. If most farm products are in low supply it is because prices are not sufficient to warrant the employment of extra labour at prevailing wages. Farm wages and other costs have increased disproportionately to the selling price of farm products in the last few years with the result that the farmer cannot produce the extra quantity required to overcome the shortage.
If the prices of farm products were to be controlled at the present level, instead of benefiting the consumer I am afraid you would create a much worse condition through a further aggravation and decrease in the already low production. In the past the farmer's wife, and his sons and daughters, have been giving long hours of free labour which contributed to food being placed on the market at a cheap price. As the farmer cannot compensate his family for their free labour, his sons and daughters are leaving for the city where they can enjoy the pleasure of a 40 hour week with a 48 hour take-home pay.
Did it ever occur to hon. members that this 40 hour week with a 48 hour take-home pay would result in the consumer finding that her dozen consisted of only ten units and her

pound of only 13 ounces should the producer make the necessary reduction in order to offset increased costs caused by the 40-48 build-up?
If prices to the consumer are really too high I suggest that restrictions be placed on credit for the purchase of non-essentials, and possibly a direct subsidy given to the consumer, to be applied toward his essentials if need be. I feel that the real remedy at this time is not price control, with all its coupons and regulations, but rather the necessity of a keen sense on the part of everyone of giving back to the dollar what they draw from it. If we insist on giving a lesser service for the service we expect in return I am afraid that all the controls imaginable will be of no avail, will be useless and inapplicable.


Mr. W. Ross Thatcher (Moose Jaw):: Mr. Speaker, I should like to take only five minutes in this debate to make one particular point. We have listened) for the past several days to a rather contentious discussion of the cost of living. The position of the party to which I belong is well known, and I am not going to labour it at this time. For many years I have listened to the government tell the country that the cost of living index is affected by certain external factors. Last night I heard the Minister of Trade and Commerce (Mr. Howe) state that fact. In this instance I am inclined to agree with the government and. therefore I propose to discuss briefly this afternoon a specific external factor which I shall contend has a definite relationship to the Canadian cost of living. I refer to the words and actions of the United Nations commander in Korea, General Douglas MacArthur.
Every time this general, who commands Canadian troops, makes one of his inflammatory speeches or political pronouncements he stirs up war fears which cannot help but affect the cost of living in Canada and elsewhere. The Korean war started the rampage of rising prices. I do not think any hon. member would deny that. Therefore I suggest that what the commander in that theatre says affects Canadian prices. There are few members in the house who would deny that General MacArthur has many good qualities. There are few members who would deny that the free world owes a debt to this American. Nevertheless I am sure that most hon. members, regardless of their party, are alarmed and concerned at the general's repeated and stubborn insistence upon intervening dangerously in political matters and international policies beyond his responsibility.
80709-114J
Cost of Living
Most Canadians have an inherent distrust of the general in a political way. They simply cannot understand why the United States government permits his continued meddling in political matters. Since his appointment as the United Nations commander, the general has consistently refused to leave political matters to the leaders of the various nations engaged in Korea. He refuses to stick to purely military matters. Time and again he has recklessly intervened in matters outside his authority, and by so doing he has created much ill will and confusion among the allies.


Mr. Browne (St. John's West):: On a point of order, is the hon. member in order in discussing the situation in Korea?


Mr. Deputy Speaker:: I believe he is out of
order.


Wilbert Ross Thatcher: Speaking to the point of order, I would suggest that the very rapid increase in the cost of living was caused by the Korean war. I also suggest that some of the pronouncements that the general is making are having a considerable effect upon our cost of living index. I am sure that the hon. member who has objected would not suggest that external factors as well as internal have not something to do with the situation, and I propose to proceed.


Mr. Deputy Speaker:: I would suggest that the hon. member relate his remarks strictly to the amendment.


Wilbert Ross Thatcher: That' is what I am talking about, price control, the high cost of living. General MacArthur, supposedly working under instructions of the United. Nations-


Some hon. Members:: Order.


Wilbert Ross Thatcher: -theoretically has only
limited powers, and yet our own government-


William Joseph Browne: Mr. Speaker, on a point of order-


Wilbert Ross Thatcher: This is quite in order, Mr. Speaker.


Mr. Deputy Speaker:: The hon. member for St. John's West (Mr. Browne), on the point of order.


William Joseph Browne: I raised a point of order a few moments ago. Your Honour ruled that he was out of order, and he is still going on.


Wilbert Ross Thatcher: He did not.


An hon. Member:: Oh, yes, he did.


Wilbert Ross Thatcher: Mr. Speaker, the point I am trying to make is that our nation has

Cost of Living
troops in Korea, and surely parliament should have some say as to how, where, and in what method these troops are going to be used.


An hon. Member:: Not on this question.


Wilbert Ross Thatcher: I ask my good friends to the south of us in the United States whether they want the Korean campaign to be a one-man show, or do they want-


Some hon. Members:: Order, order.


Wilbert Ross Thatcher: -it to be a team affair. If they want it to be a team effort, then they should have General MacArthur resign.


Mr. Deputy Speaker:: Order. When the hon. member speaks of General MacArthur he is out of order. I would ask him to confine his remarks to the cost of living.


Wilbert Ross Thatcher: Thank you. I shall proceed. With few exceptions, as I said a moment ago, Canadians are convinced of the justice of our cause in Korea. We are well aware of the great sacrifices that are being made, particularly by the Americans, in Korea. Nevertheless we cling to the fervent hope that this limited war may by statesmanship be prevented from spreading to a general war. Many of us are very much afraid that General MacArthur, with some of his ill-advised pronouncements, may embroil us in a third world war, which I do not think anyone in Canada wants. On December 5 most of us felt reassured that the general's sabre-rattling speeches were going to end, because on that date the United States government ordered the general-


William Joseph Browne: On a point of order, Mr. Speaker, the hon. member is ignoring your ruling. I must ask that your ruling be enforced.


Mr. Deputy Speaker:: I would ask the hon. member to confine his remarks to the cost of living.


Wilbert Ross Thatcher: That is what 1 am doing.


Gordon Knapman Fraser: The cost of living in Korea, not here.


Wilbert Ross Thatcher: I am talking about the Korean affair and how the supreme commander there is affecting our cost of living.


Some hon. Members:: Order.


Wilbert Ross Thatcher: General MacArthur fell
in line with the pronouncement of his government for a while. However, in tonight's Ottawa Journal there is an article with the subheading "Stands Pat in Two-Hour Conference". In part the article reads:
General MacArthur made It plain to his superiors today that he intends to keep right on fighting for a freer hand in the Korean war.
[Mr. Thatcher.)


Some hon. Members:: Order.


William Joseph Browne: If the hon.
member is allowed to discuss that subject, I think other hon. members should be allowed to discuss it.


Mr. Deputy Speaker:: I am very sorry,
but. I must rule the hon. member out of order in discussing General MacArthur's conduct in the Korean campaign.


Wilbert Ross Thatcher: If Your Honour makes
that ruling, I will have to bow to it.


An hon. Member:: He has made it three
times.


Wilbert Ross Thatcher: But I hope that in the very near future, in order to lower our cost of living, the Canadian government will demand the resignation of this man before the United Nations.


Some hon. Members:: Order.


Gordon Knapman Fraser: No, no.


Wilbert Ross Thatcher: I think that if our government does not demand his resignation-


Some hon. Members:: Order, order.


Wilbert Ross Thatcher: -we are going to have much higher prices, and the cost of living is going up even more. Therefore I say that this trigger-happy prima donna, as I am going to call him, should be recalled at once.


Gordon Knapman Fraser: Order. That is uncalled for.


Mr. Deputy Speaker:: Order.


Mr. Harris (Danforth):: Mr. Speaker-


Mr. Deputy Speaker:: The hon. member
for Vancouver East.


Mr. Angus Maclnnis (Vancouver East):: Mr. Speaker, I wish to take part in this debate for a few moments. I assure you I would not do so if it were not for the fact that I believe this is the most important question facing the people of Canada today. I know that I am in agreement with perhaps all hon. members of the house in making that statement. The question of inflation or rising prices is not a new one. It is one that has plagued us in Canada since controls were removed following the end of world war II. I have a vivid recollection that at about this time in the session of 1948 we were debating the setting up of a parliamentary committee to examine into the reasons for rising prices. The average cost of living index for the year 1948, according to the figure I have before me, was 155, and at that time we thought that looked pretty bad.
Today we find that the cost of living index is about 180, that is, 25 points higher than it was in 1948. What makes this situation really desperate is that there are large numbers of

people who have not increased their incomes at all since 1948, and because they have not done so they have taken a very drastic drop in their standard of living.
Speaking in the debate last evening the Minister of Trade and Commerce (Mr. Howe) had this to say, at page 1758 of Hansard:
The government is just as concerned about rising prices and inflation as are the members of the opposition who have spoken.
He then referred to the situation in almost the same words as I did when I rose to speak:
There is perhaps no problem before the democratic countries today more important than inflation, for inflation can undermine the very foundation of society.
He then went on to say the government is taking positive measures to control inflation. I would like to know what those positive measures are. Not only that; I would like to know what effect they are having in reducing prices, because being positive measures they should be effective. Are they helping bring down the cost of living? The minister drew attention to the fact that between August, 1949, and January, 1950, the cost of living index dropped from 162-8 to 161. That was a drop of 1 -8 in five months, and I assume that drop took place before the government undertook their fiscal and monetary policies to stem inflation. But since January, 1950, the cost of living has risen from 161 to 179-7 as at February 28, 1951. I want to tell the members of this house that inflation never cured itself. It has brought ruin to every country in which the government did not have the backbone to take action to curb it, and the same thing will happen in this country.
I am rather amazed at some of the reasons put forward by speakers, especially on the government side, for the high cost of living. Last evening the hon. member for Cochrane (Mr. Bradette) said we could not have price control unless we also had wage control. The hon. member for Springfield (Mr. Sinnott) speaking a little later blamed the trade unions for high prices. As usual, because it is not safe to be too hard on large numbers of people who have votes, he laid particular blame on the leaders of the trade union movement as those responsible for the high cost of living. Just a moment ago the hon. member for Glengarry (Mr. Major) spoke of the difficulties of the farmers under the present system, with industrial prices rising faster than farm prices.
What amuses me, or would amuse me if it were not so tragic, is that all of these hon. members believe in the ffee enterprise system. What is that system? Fundamentally the free enterprise system is based on the
Cost of Living
principle that everyone is entitled to .take for himself everything he can get. If he can get a great deal so as to enrich himself beyond his fellows, then he is looked up to by the whole community. I am afraid these hon. members do not understand that free enterprise does not apply any more. There is scarcely any industry outside of farming where free enterprise operates unhampered or where today the law of supply and demand is working. I could draw attention to cases now before our courts of alleged monopolies to control prices, so that every time you light a match you are adding to the wealth of a small group of people. Every time you buy a loaf of bread you are adding to the wealth of another small group of people who not only set their prices but police those prices. I could enlarge on that and discuss the investigation into dental supplies, where one might say they make you pay through the nose for your false teeth.
All these things indicate that free enterprise no longer operates; and because it does not operate, those who control the economy are in a position to hold up the community to ransom, and do so. Until we are prepared to tackle that question realistically we are not going to deal very effectively with the question of the cost of living. I might read a small item that was clipped from the Manitoba Co-operator of March 9, 1950. It is the report of a speech by Mr. James H. Gray, editor of the Farm and Ranch Review, at the Marlborough Hotel in Winnipeg to students of field crops who were taking a short course. He traced the history of the law of supply and demand as propounded by Adam Smith, and the report has this to say
At this point Mr. Gray emphasized there has never been a time in world history when the greatest food surplus in existence was anything but a minute marginal surplus compared to the amount that was consumed. But because agriculture was the only important industry in which the law of supply and demand was permitted to operate, these fractional surpluses were ruinous to the producers.
Then he said, and this is in quotation marks:
They will continue to be ruinous as long as we allow ourselves to be mesmerized by a so-called principle that has no existence in the real world.
That is the principle of free enterprise, the principle of the operation of the law of supply and demand; a principle, let me tell you, that no longer applies. And we are fooling ourselves if we go on the assumption that it does.
Let me reply to the hon. member for Cochrane and the hon. member for Springfield as to the position of the trade unions. At no time has the trade union movement said that it will not accept wage controls. As I have pointed out in this house on numerous occasions, wages are controlled now. T'o

Cost of Living
trade union, no matter how powerful it is, can boost its own wages without going through the legal procedure that is laid down by the laws of this parliament or by the laws of the legislatures of the various provinces. When it does get an increase, it gets an increase that has been adjudged proper in the circumstances by a board that has heard the evidence as to the cost of living and that sort of thing which enters into wages. Not only that, but trade unions today are not only allowing or adopting the control of wages, but they are also to a certain extent accepting the freezing of wages. I refer to the escalator clauses that are now in agreements by means of which wages are tied to the cost of living index. When the cost of living index goes up several points, then, in accordance with the formula contained in the agreement, wages will go up a certain number of cents. If the cost of living falls a number of points, then wages will go down a number of cents. Surely nothing could be more reasonable than that.
There is another question which I am going to ask my friends who would control wages and who would insist that wages be controlled in the same way as any commodity. My question to them is this. Do you take the position that labour is a commodity? If you take the position that labour is a commodity, labour has just as much right to form a monopoly to sell its commodity as any other industry or group of industries. Ordinarily, people do not like to hear labour referred to as a commodity, and really it is not. What a worker sells is not his labour but his labour power, which is something different. When we take the position that we are going to put the energy of human beings, men and women, into the same category as cabbages, hides, steers, plows and harrows and all that sort of thing, then I believe we had better adjust our thinking. That type of thinking is going to get us into trouble.
I was interested in reading in today's Gazette a report of a speech by Dr. W. H. Garrett, O.B.E., of the Monsanto Chemical Limited of Great Britain. He was speaking to an audience at the Windsor hotel in Montreal. I want those who would blame the trade unions to note this, because the speaker is an employer of labour. He said:
The day when labour could be considered as a commodity or raw material for industry has gone, and some pew concept of the role played by labour in industry must take its place.
If we do not arrive at that concept, the trade union movement will arrive at that concept because they are not going to put themselves in the position of being bartered as a commodity or a raw material that is
[Mr. Maclnnis.l
bought and sold for the benefit of industry. They are human beings. While those who may own industry put their money in it, those men and women put their lives in industry. They are surely entitled to something more than the mere cost of food, clothes and shelter to enable them to produce from day to day and leave their kind after them to continue the process. That day is gone. I would suggest to those hon. members of the house who think that they can put the blame for rising prices on the trade union movement that they ought to think again.
I noticed that neither the hon. memtjer for Springfield nor the hon. member for Cochrane referred to the profits that were being made by industry during the past few years; those profits have something to do with rising prices. But no, they were not concerned with profits but with wages, and the way the trade union movement was exploiting the people of Canada.
When speaking yesterday afternoon, the Minister of Trade and Commerce (Mr. Howe), as reported at 1761 of Hansard, said this:
Every country about which I know has had to accept some increase in the cost of living in recent months. In the United Kingdom, where controls have been more extensive than in perhaps any other country, the cost of living has been rising faster than in Canada. The United Kingdom government found that it could not go on paying higher and higher subsidies indefinitely. I believe that, whereas the cost of all retail prices in Canada rose by fifteen per cent in the year 1950, the increase in the cost of all retail prices in England was twenty-three per cent, and I believe in Australia it was still higher.
I have the Labour Gazette for March, 1951, in my hand. At page 434, there is a table giving the index numbers for the cost of living in Canada and other countries. I find that for Canada the cost of living index in January, 1950, stood at 161-5 and in December 171-1. The increase for the year was 9-6 points. I do not know what that would really work out to in percentage, but it would be between 6 and 7 per cent. Looking at the index for the United Kingdom, I find that in January, 1950, the index stood at 113; it was 116 in December, 1950, or an increase of 3 points. I believe that would be a little over 2 per cent. I am taking the figures as the Minister of Trade and Commerce gave them in the house, and I am giving the figures as they are produced in the Labour Gazette for March of this year.


Mr. Dickey:: Will the hon. member permit a question?


Angus MacInnis: Yes.


John Horace Dickey: Was not that statement of the Minister of Trade and Commerce (Mr. Howe),

that all retail prices in the two countries had risen by different percentages, and not the cost of living index?


Angus MacInnis: That is quite possible. My hon. friend will note that when I was reading the minister's statement I emphasized the word "all".


John Horace Dickey: That is right.


Angus MacInnis: But in the table the column for Canada is headed: "Cost of Living- Dominion Bureau of Statistics." For the United Kingdom, it is headed: "Interim Index of Retail Prices, Ministry of Labour." I do not know whether it would make any difference if all retail prices were taken or whether the cost of living index were taken, which in a general way pretty well includes all prices, because what is not included in the special items is included in the miscellaneous item. I have been careful to point that out, and I am sorry that the Minister of Trade and Commerce had occasion to leave the chamber after I began speaking.
Another point made by the Minister of Trade and Commerce, as reported at page 1759 of Hansard is as follows:
Perhaps I might conclude this brief analysis of some of the main causes of the recent increase in the cost of living index by examining the 4'5 point increase that took place in February and that precipitated this debate and forms the basis for the opposition amendment. Of that increase, 66 per cent was accounted for by food, 10 per cent by clothing, 5 per cent by rents and 19 per cent by other items.
I do not know whether or not the Minister of Trade and Commerce was putting these figures forward as a sort of mitigation of the amount of the increase. But if so, from my point of view they only make the increase all the more disturbing, because the lower the income of the individual or the family, the larger the share of it that is spent on food and the other essentials of life. With that increase, nearly all of it in food, clothing and shelter, those people now find, as they must, that the burden of living has been increased for them considerably.
Let me draw attention to another factor, namely that the consumption of essential foods in this country is decreasing despite the fact that the population is increasing. The day before I left my home town to come here after the Easter recess, I saw in the Vancouver Daily Province an article with the headline "Canadians Eat Meat Despite Climbing Prices." When one began to read the article, one would think that the people of Canada were eating more meat than ever.
Cost of Living
But before one got to the end of it, this is what one found:
While business was at a new high, the total volume output slipped. Meat production declined to 1,444,000,000 pounds down from 1,484,000,000 in 1949.
Broken down, this showed beef output at 617,400,000 pounds, down 10-3 per cent; veal, 90,200,000 pounds, down 3-8 per cent; mutton and lamb, 23,100,000, down 19 per cent. Pork was the only item to climb, moving up to 713,300,000 pounds, an increase of 6 per cent from 1949.
Here in this country, where we are told that we have the highest standard of living in the world, we find that the standard of living is falling because, with increased prices, the poorer people are not able to buy those foods that are essential for health. They must confine themselves to the cheaper foods. In my opinion the reason that the government has failed and is failing to do anything effective with regard to price control is that they have lost touch with the common people of this country. They meet only top civil servants and business executives, and those people do not have to curtail their expenditures on food. Towards the end of his speech, the Minister of Trade and Commerce said, as reported at page 1762 of Hansard:
The greatest contribution any Canadian can make to stop inflation is to avoid panicky buying and to produce as much as possible. All of us should be thinking in terms of working harder; of working longer hours, rather than shorter hours.
There is too much of a tendency,-
This is a gem, Mr. Speaker. I did not notice it until just now, although I read it several times.
-it seems to me, for people to look to government for solutions to their problems.
Imagine a government that made so many promises two short years ago-they seem long to the people who are always hungry, of course-coming to this house and saying now that people have a tendency to look to government for solutions to their problems. What did the government tell the people of Canada in 1949? They said, "Elect us and we will solve your problems. You will not have any". Unfortunately, the people took them at their word. Now the government are saying, "we will not solve your problems." That is what they are saying, because the greatest problem facing the people of Canada, on their own say-so, is the high cost of living. The government do not intend to do anything about it. Oh, they will increase the down payment on instalment buying, but that is only a curb on the person who has not the full price to pay for what he is buying. As to the person who has the price with which to pay as much as he or she cares to pay, there is no curb whatsoever on him or her. It is class legislation. The

Cost of Living
manager of a department store called me up just before I left home and drew attention to the increases in the amount of down payment on instalment purchases and the reduction in the time for the payment of the balance. He tells me that a person, if he has the requisite credit standing, can go and borrow money without any time limit whatsoever and pay cash for what he buys. There is no restriction on his purchases and there is no restriction on his financing. It seems to me that is hardly good enough.
However, the Minister of Trade and Commerce (Mr. Howe) did say:
Governments can help and should help in dealing with inflation.
Well, now, if they can help and should help, I wish to God they would help. That is the only thing that remains to be done. The only thing that is required now is the will, because they admit that they should help and they could help. Now, will you help? The minister goes on:
But consumers, labour unions, farm organizations, and businessmen can do much by their own efforts to reduce the pressures that lead to higher prices.
Last Sunday I listened, as I always do when I have the opportunity, to "Capital Report". The Canadian commentator had a more effective solution than the Minister of Trade and Commerce for the problem of rising prices. His solution, or the way to stop rising prices, is: If you haven't the price, don't buy. That is a wonderful motto provided that it is the question of a mink coat, a bottle of Scotch or a gold ring.


An hon. Member:: Or an automobile.


Angus MacInnis: Or, as my hon. friend says, an automobile.


Heber Harold Hatfield: Or champagne.


Angus MacInnis: Or champagne, or anything of that kind. But the people with whom I am concerned are not the people who have a choice in the matter of buying or not buying. The people with whom I am concerned are the people who must buy or go hungry, or go without the things that they need. If members of the government would only go to the chain stores once in a while and mingle with the crowd, who in many instances are looking hungrily at the things they would like to have and cannot purchase, they would do something more about the cost of living than they are doing.
There is another point I wish to make before I sit down. Perhaps I might say that all this reminds me of a famous queen. Was it Marie Antoinette who said, if the people cannot eat bread why don't they eat cake? We say, if you can't buy, go without.

There is another factor in this rising cost of living. It is not only affecting the food of the people, it is also affecting the ability of the people to shelter themselves. Not only is it affecting the ability of the people to shelter themselves, but it has also pretty well put a stop to what the government was doing to build houses for people who could not build houses for themselves. I hold in my hand a copy of a letter which was addressed to the Minister of Resources and Development (Mr. Winters) by Mrs. Rex Eaton, chairman of the Vancouver housing association. The letter is dated February 14. It drew to the attention of the minister the question that was raised in this house the other day by the hon. member for Vancouver-Quadra (Mr. Green), namely, the cessation of work on the Fraserview veterans housing project. I shall read the first paragraph of the letter to show the house the serious situation that has been brought about in my city by the rising cost of living. The paragraph reads:
Dear Mr. Minister:
This association is much concerned over press reports that the Fraserview veterans housing project in Vancouver may not be completed, owing to high building costs. With a population increase for the city of Vancouver alone of over 20,000 in the last two years, the housing situation remains as acute as ever, and the most urgent need is for moderate rental housing such as that provided in the Fraserview project.
But the government's solution for that sort of thing is to stop even the small amount of building they were doing. They admit today that they cannot build houses to rent at the price that they hoped to rent them at a few years ago. And because they cannot build houses that will rent at a price that the people can pay they will not build houses at all. Where are the people to get the shelter?
I see that it is getting near six o'clock, Mr. Speaker, and since I do not want to keep you away from your dinner I will conclude by saying that I know that to put effective price control into operation is not an easy task; I know that many people would try to evade controls; I know also that it would be irksome to many others. But, Mr. Speaker, there is in my opinion a case for price control. That case is the deplorable economic condition of thousands in Canada who are trying to eke out a living on incomes which are wholly inadequate. What is the government, what is the country, going to do with the old age pensioner, with the person on a small disability pension, with the recipient of a war veterans allowance, with thousands on small superannuation and retiring allowances, with those on social assistance, with the unorganized workers on low incomes, with the small businessman and with the marginal

farmer? The welfare of these income groups, in my opinion, is as important to us today in the world in which we are living as is the defence of this country through military effort, because if we do not make secure the lives of our people while we have the means to make them secure, we cannot defend ourselves from those evils that have overtaken all governments who refused to look after the welfare of their people.
On motion of Mr. Dickey the debate was adjourned.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


Douglas Charles Abbott: Mr. Speaker, I move:
That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
In the twelve months which have elapsed since I brought down the last annual budget disquieting changes have occurred in the state of the world, and in Canada's place in it. The prospect is still far from clear. Great issues are still in the balance.
Last June the international tension crystallized in Korea. In September, parliament wholeheartedly supported the government's policy of participation in repelling this aggression. It was our hope then that the action in Korea would soon be brought to a successful conclusion. But later events took a graver turn when the Chinese communist government supported the North Korean aggressors in force. An end to the war in Korea is not yet in sight; indeed, there are indications that the United Nations forces may shortly be facing a most severe test of strength.
The Korean situation is significant of even greater dangers. It indicates that Russia is prepared to take steps involving the risk of a general war. While the strength of the west is increasing, so also is Russian strength. In the months that lie ahead, perhaps indeed for several years, we shall face a test of nerves, of our readiness to sacrifice immediate interests for future security. This is the background against which the budget must be viewed.
Without minimizing our anxieties, we are, however, entitled to take encouragement from certain of the developments during 1950.
The Budget-Mr. Abbott Since I shall of necessity have to speak at greater length this evening about matters that will be less pleasant and less welcome to us as individuals, I feel I should call attention now to some elements that favour us. We have serious tasks before us, but that is all the more reason why we should clearly understand that some of the changes that have occurred are on the asset side of the balance sheet, and if we are given time and if we take full advantage of that time, they will outweigh our present dangers.
The first great asset we have acquired- and it is perhaps immeasurable-is that the free world has realized its dangers, and has shown a capacity to agree upon courses of action and to act effectively. For this great event of 1950 we owe much to the vigorous leadership of the United States and the experienced partnership of the United Kingdom. Let us never forget that upon the continued enlightened and cordial partnership of the United States and the United Kingdom the peace and prosperity of the whole world heavily depend.
Nor should we fail to appreciate the response to the crisis made by the peoples of free Europe, and especially by our associates in the North Atlantic treaty. With all these peoples we have ties of race and kinship, and now we are joined by the still stronger bond of common ideals and common purpose. The visit with which the President of France has just honoured us has strengthened the links which history and culture forged long ago between our two countries.
This unity in action on the part of the free world is the first great and incalculable change for the better during the past year. If this unity should weaken, or if it should disintegrate, the outlook would be dark indeed. That is why it must be a fundamental object of our policy to promote and strengthen this unity of purpose and policy. We do well to take pride in the imperishable record of 1940 and 1941 when the commonwealth stood alone, but we should also take care that we are not called upon a second time to face such perils alone.
Another asset we have acquired during the past year is the very considerable continued improvement and expansion in the productive capacity of the western world. During 1950 industrial production in western Europe advanced by 20 per cent and is now operating at a rate about 35 per cent above pre-war. In the United States industrial production during 1949 experienced a sharp decline. In 1950 it recovered rapidly and is now running at a rate about 115 per cent above pre-war. Canada's industrial production was almost unaffected by the 1949 decline in the United
1798	HOUSE OF
The Budget-Mr. Abbott States; in 1950 it increased still further and is now about 110 per cent above pre-war.
The recovery of European capacity to export has also been most encouraging. In 1946 the volume of European exports was only one-half of the pre-war average; by 1949 it had recovered to pre-war levels, and is now running 25 per cent higher. Much of this improvement has been the result of the realignment of exchange rates to more realistic levels which took place in September, 1949. As a result of these improved conditions the dollar problem has receded into the background, at least for the time being. It still exists, however, and the rearmament program may revise it to some extent, but it no longer dominates the economic scene as it did two or three years ago.
A third great asset we should take full note of is that here in Canada, unlike so many countries, our people are not split and divided by fundamental cleavages of opinion. My task this evening is made easier because I sense that there are no great issues of principle dividing us. Individuals and parties in this house will differ on particular proposals, and in the course of debate on this motion it will be right and proper that those who differ should criticize. There may be differences of view with respect to degree and timing, but I am confident that on the major questions of policy underlying my proposals we are all fundamentally agreed.
The tasks before us will not be easy. We shall have to forgo some of the prospects of individual economic improvement that seemed to be our right. We shall have to yield for the time being a part of our economic gains of the recent past. But we must address ourselves to these tasks, and pay whatever price may be necessary to preserve peace and assure freedom.



CANADIAN ECONOMIC TRENDS

[Stage Direction]
I turn now to a review of Canadian economic developments during the past year and to a projection of these trends into the year that lies ahead. A^ usual I am tabling a white paper which presents the more important economic and financial statistics in a convenient form, together with some brief explanatory notes and comments. The white paper also includes the usual preliminary details of our public accounts for the year ended March 31, 1951. I commend these budget papers to the careful study of all hon. members, and with the consent of the house I ask that they be printed as an appendix to today's debates.

[Stage Direction]
Almost every significant economic indicator in Canada established new records in 1950. Gross national production in 1950 was close 
[Stage Direction]
to $18 billion, net national income was about $14 billion, and personal expenditures on consumer goods and services were not far short of $12 billion. Gross capital investment was about $4 billion, and wages and other labour income nearly $8J billion. Most of these figures are seven or eight per cent above 1949. A little less than half these increases represents increase in physical terms, and the rest is a reflection of higher prices.
The statistics of net farm cash income indicate an apparent decline of $90 million, but this is due to lower initial and participating payments on western grains during the past calendar year. In 1949 western farmers received payments from the wheat board amounting to $100 million more than the value of the grain delivered, and in 1950, $60 million less than the value of their deliveries. Agricultural production in Canada in 1950 was higher in both volume and value than in 1949, and farmers' cash income, excluding the variations in, wheat board disbursements, was five per cent greater in 1950 than in the year before.
Investment and miscellaneous income in 1950 reached a new peak of $2-9 billion, a reflection of the very heavy new capital investment of recent years as well as the rising prices and high business activity of 1950. In the years 1946 to 1950 more than $9 billion of new plant and equipment has been installed by Canadian industry. Accurate figures of total capital investment in our industries have never been compiled, but I think it is a safe statement that during the past five years it has increased by not less than 40 per cent. Our industrial labour force during the same five years has increased by 12 per cent, and our agricultural labour force has declined 10 per cent.
Forecasting the future is always difficult, and in Canada is perhaps particularly difficult, partly due to our heavy dependence on the harvests of the land and sea, neither of which can be confidently predicted, and partly due to our dependence on foreign markets. This year it is made still more difficult by reason of uncertainties respecting steel and other materials and the shortages of special classes of skilled manpower. Every minister of finance, however, must adopt a view of the future, and I am basing my budgetary proposals on an assumption that the gross national product in 1951 will reach about $20 billion. That is an increase of about 12 per cent over 1950.

[Stage Direction]
The latest available statistics covering nonagricultural employment in Canada indicate

that there are about 130,000 more persons employed than at the same time a year ago, and that there are about 115,000 fewer persons seeking work.
Monthly labour income at the end of 1950 was 11 per cent higher than a year earlier. For the eight leading industries regularly reported upon by the dominion bureau of statistics employment increased by five per cent during the year, weekly wages by seven per cent and total payrolls by twelve per cent. Average number of hours worked declined by a small fraction to a point just under 43 hours a week. Compared with the beginning of 1946 average weekly earnings adjusted by the cost of living index showed an increase in "real" earnings of nine per cent. Compared with a year ago the increase was about two per cent.
A manpower problem is likely to develop during the coming year. It is not likely to take the form of a serious over-all labour shortage, but there is already a scarcity developing in certain types of skilled labour, and it seems probable that these shortages of particular kinds of skill will become more widespread as defence production gathers momentum. As hon. members know, the government has recently appointed a national advisory committee on manpower to study and advise upon these matters.

[Stage Direction]
Personal spending on consumer goods and services in 1950 was about seven per cent higher than in 1949. A large part of this increase was concentrated in the second half of the year, and the increase was most conspicuous in consumer durables. The number of new passenger cars sold in 1950 was double the 1948 figure and 60 per cent greater than in 1949. Sales of electric refrigerators were three times as great as in 1948 and more than double the 1949 figure. And these rates of increase have probably accelerated during the first three months of this year.
Personal spending increased more than personal incomes, resulting in a decline in net personal savings out of current income. This decline in new savings amounted to about $270 million, or a drop of about 30 per cent.

[Stage Direction]
During 1950 there were a number of important changes in the pattern of our foreign trade. Exports from Canada increased by about four per cent to a peacetime record of $3,157 million. Since the price of oqr exports averaged about five per cent higher than in 1949 there was probably no increase
80709-115J	'
The Budget-Mr. Abbott in the volume of goods sold abroad. Imports, on the other hand, increased sharply in both volume and value. The total value of all merchandise imports in 1950 was $3,174 million, or an increase of 15 per cent over 1949. It will be seen from these figures that we imported $17 million more than we exported. This, however, does not take account of our exports of $162 million of gold which are not included in our regular merchandise trade statistics.
Changes in the direction of our trade were also significant. Our imports from the United Kingdom increased 32 per cent; from all other overseas countries by 27 per cent; and from the United States by 9 per cent. On the other hand, our exports to the United States increased 34 per cent, while our exports to the United Kingdom declined by 33 per cent, and to all other countries by 20 per cent. As a result of these shifts in trade our regional trade became much better balanced. In 1949 our exports to the United States paid for only 78 per cent of our imports; in 1950 they paid for 96 per cent. In 1949 United Kingdom exports to Canada covered only 43 per cent of her imports from us; in 1950 this figure rose to 85 per cent. For all other countries our imports in 1949 covered 64 per cent of our exports to them, and in 1950 this trade was almost exactly balanced.
Estimates of our balance of payments for 1950 indicate that we had a deficit on current account of about $300 million and a surplus on capital account of about $900 million, yielding a net increase of about $600 million in our gold and U.S. dollar reserves.
I think all hon. members are familiar with the facts of our extraordinary, I might even say embarrassing, increase in U.S. dollar reserves last summer when they increased by more than $500 million in ten weeks. After reaching a peak of $1,827 million at the end of October, 1950, our reserves have declined moderately and at March 31, 1951, stood at $1,653 million. At March 31,	1950, our
reserves stood at $1,192 million.
One welcome consequence of the improvement in our exchange position was that we were able to withdraw all the emergency exchange conservation restrictions which we had to impose in November, 1947. After a steady series of relaxations during 1949 and 1950 the last of these restrictions disappeared on December 31, and the act itself was revoked by proclamation on January 15, 1951. The application of such restrictions is an irritating and a thankless task, and I should like to take this occasion to pay tribute to all Canadians, both consumers and businessmen, for the co-operative and understanding
1800	HOUSE OF
The Budget-Mr. Abbott way in which they bore the complexities and the annoyances of this period. The demise of this act was unwept and unsung, but I trust not without honour.
Another consequence of our improved trade and general economic position was our action with respect to exchange rates last September. During the month of June an inflow of speculative capital from the United States became noticeable and it gathered momentum through July and August, reaching almost flood proportions in September. This inflow of funds, this tribute by New York to the essential soundness of the Canadian economy and its prospects, was rather sudden and not a little embarrassing. Much of it was looking for a quick ten per cent profit in the expectation that the Canadian dollar would be moved back to parity with the United States dollar. The inflow created difficulties for us not only from a banking point of view, but also in the sharp inflationary stimulus it applied to our money supply. The Bank of Canada took energetic measures to sterilize this inflow by heavy selling from its portfolio of government securities, and the government was in the fortunate position of having a cash surplus enabling it to finance part of the inflow which would otherwise have required further borrowing.
After careful review of all the relevant factors, and after consultation with the international monetary fund, we came to the conclusion that the wise policy to follow was to withdraw the official rates on the United States dollar and allow the exchange rate to find its appropriate level in response to the normal supply and demand forces operating in the market from time to time. As hon. members know, this operation was carried out smoothly, and during recent months the American dollar has been fluctuating narrowly and quite normally at premiums varying between 4J and 5J per cent.

[Stage Direction]
Two great issues, Mr. Speaker, face the world today. They are the pursuit of peace and the control of inflation. Neither of these is peculiarly Canadian. Both are matters of great concern to every decent country in the world. In respect of neither of them are we fully masters of our own destiny, for we live in a highly interdependent world. But both of them have had a large part in framing the policies of expenditure and revenue which are joined in my budget tonight.
Of our policy of seeking an enduring and expanding peace I need not speak at any length. It is clear and it is unambiguous. 
[Stage Direction]
Its financial aspects are found in our defence estimates, in our provision for aid through various United Nations agencies both for relief and for other constructive purposes, and in the estimates which will be tabled later in this session for our co-operation in the Colombo plan.
I must, however, speak rather more fully about ways and means of restraining inflation. As I said a moment ago, this is not just a Canadian problem; it is a world-wide trend. Indeed, price increases in Canada during the past year have been more moderate than in other comparable countries. During 1950 wholesale market prices in Canada advanced 15 per cent; in the United States they advanced 19 per cent; in Australia 22 per cent; in the United Kingdom 23 per cent, and in most of the western European countries between 20 and 25 per cent. There is some satisfaction, though perhaps not much, in being not quite so badly off as one's friends and neighbours.
We must face the fact, however, that a considerable measure of inflation is abroad in the world. The continued increase in the various price indexes during the past three months is evidence of that. As the London Economist put it a few weeks ago, "the virus of inflation has got into the economic blood stream." Even if strong and effective measures are taken in all major countries it cannot be cured overnight. But it is the duty of each country, having regard to its own circumstances, to take all the practical and sensible measures available to it to bring this virus under control.
We in Canada have already done a great deal. As I have said on previous occasions, this is not a matter in which government policies alone can provide a complete solution. It is a matter which requires the fullest co-operation of all sections and groups, in which every person has a part to play. But governments can and should do a great deal. The government can exercise careful control over its own expenditures; we can follow a fully pay-as-we-go policy; we can restrain the expansion of credit; and we can apply direct controls either to particular conditions or, if necessary, more generally. In Canada we have done all of these and we shall continue to develop and apply these policies.
The essential principle in preventing inflation is to restrict the total of all expenditure, public and private, to an amount which can be met from our production and imports. The necessities of defence now require that our expenditure for all other purposes should be reduced-making due allowance for the increase in prices that has already occurred.

This requires us all to reappraise the priorities of our expenditures fot various purposes and projects. Immediately following the Korean crisis last summer the government reviewed its own expenditure programs, and many projects that had been planned and for which parliament had voted funds were deferred. Since that time the numbers in many units in the public service have been reduced or held below the figures for which parliament had appropriated salaries. Hon. members and others have already seen tangible effects of this policy. The detail pages of the estimates show many instances where expenditure in the past year has been considerably below what was authorized and planned, despite the increase in wages, salaries, and prices.
For this new fiscal year we have applied a similar but more severe test of need. For non-defence purposes we have reversed the upward trend in expenditures. The estimates placed before parliament for this year show a reduction of $35 million below last year, despite an increase of more than ten per cent in salary and wage levels, despite higher materials and construction costs, and despite an increase of nearly $40 million in old age pensions, family allowances, tax rental agreements with provinces, and similar payments that rise automatically with increases in population and the value of production. The numbers of employees engaged in normal government administration are being reduced, and parliament is being asked to appropriate salaries or wages for about five per cent fewer employees than last year, apart from defence and related services. This reduction is made possible in part by an increase in normal office working hours, and by the elimination of certain services and activities.
We have paid particular regard to our expenditures on construction, because it is in this field where we anticipate the greatest competition between the defence program and1 other public and private expenditures. Examination of the estimates for the departments of public works, transport, agriculture, and resources and development-our major non-defence spending departments in this field-reveals very large reductions in their construction programs, notwithstanding urgent needs for expenditure of this kind, following twenty years during which works have been postponed1, first for lack of funds, then for war, and finally, in recent years because of shortages of materials and labour.
It is hard to set a figure upon the reduction in expenditures that we have made because of the necessity of diverting resources to defence. I think, however, it would be fair
The Budget-Mr. Abbott to say that if we had not gone beyond the careful and prudent planning applicable to a growing Canada in a peaceful world, our non-defence expenditures might well have increased by more than $100 million instead of being $35 million less. I should like to thank all my colleagues and their senior officers for their co-operation in the difficult task of contracting their programs and expenditures.
It is in one sense misleading to talk of a special "economy drive" in regard to government expenditures. The duties of a minister of finance consist largely of a continuous search for economies. A more accurate way of expressing it is that priorities of expenditures shift and change from time to time, but given a program agreed upon for a particular year, the effort to achieve economy and efficiency is never relaxed.
Our second anti-inflationary policy is to balance the budget fully. If I may anticipate a later section of my speech I can say now that I estimate our budgetary surplus for the year just ended to be $203 million. As will also be seen from the resolutions I shall refer to later, we propose to follow a strict pay-as-we-go policy for the coming year.
Hon. members are also aware of the measures that have been taken to restrain the expansion of credit. In the field of direct action by government, regulations affecting consumer credit were put into effect last November, and revised on a more restrictive basis in March of this year. We have also begun to curtail the use of government funds by way of mortgage credit for housing and the extension of government guarantees of bank loans for farm improvements.
In the field of monetary policy, the Bank of Canada has for some time been exercising its influence to restrict the cash reserves of the banking system so as to discourage monetary expansion and, last October, raised its rediscount rate as a signal of warning. In February the bank expressed the view to the chartered banks that further increase in the total volume of bank credit would be undesirable. The banks agreed that restraint in bank lending under present conditions was in the general public interest, and adopted certain measures suggested by the Bank of Canada and described in a public statement issued by the bank. In addition to specific policies in respect to certain types of loans, it was announced that lending practices would be tightened wherever possible in all fields of bank lending in order to achieve the desired objective of avoiding further increase in the aggregate volume of the banks' loans and holdings of non-government securities. Hon. members will understand
[Stage Direction]
The Budget-Mr. Abbott that these monetary and bank credit measures depend upon voluntary co-operation rather than government regulation, but the objective towards which they are directed is, I believe, very much in the public interest.
There is, I think, a growing realization throughout the country that at a time of full employment the level of investment cannot exceed the current level of new saving by the community without having an inflationary influence. In such circumstances extension of credit requires particularly careful scrutiny. One symptom of the very large demand for credit in recent months has been the establishment of higher interest rates in Canada, as in the United States and other countries. One would like to see more restraint in the demand for loans, and larger annual savings out of income. It is now widely recognized also that, within the limits imposed by aggregate new saving, lending institutions and individuals alike can make a constructive contribution toy directing their investment policy so as to give preference to projects assisting the defence program and essential productive enterprise.
These tighter credit policies strike at the root causes of inflation by cutting down what business and consumers can spend in excess of their incomes. They take some months to show their effects on excessive purchasing and the rise of prices, but already one begins to see evidence of their influence. Along with similar action in the United States they will have a growing importance in holding prices down.
We have now had five successive years of unprecedented capital investment. A year ago I did not think that the 1950 rate of expansion would exceed the record of 1949, but in fact it was 14 per cent higher in value and about 7 per cent greater in physical volume. Preliminary reports for 1951 indicated that the business and industrial world was planning for another 15 per cent increase in capital investment above 1950. I am led to believe, however, that quite a few businessmen and other operators are revising their plans to more moderate dimensions in the light of steel shortages and tighter bank credit. But the indications are that the plans for capital expansion still being pushed forward are greater than the capacity to . fulfil them. Unless there is a much sharper increase in per capita output than we have ever had in the past it will be literally impossible for all groups in the country to accomplish what they want or what they are planning to do: the government to double its defence expenditures, consumers to raise their levels of consumption, and business to increase its rate of capital expansion.
We cannot allow the defence program to suffer, nor would* we wish to see a reduction in the levels of ordinary personal consumption. It is, therefore, largely in the field of capital investment and consumer durables that room will have to be made for the defence program. This is the more necessary since it is in- this sector of the economy- the construction, metal using and machinery trades-that most of the defence production will be inserted.
Finally there is the question of direct controls. The government, through my colleague the Minister of Defence Production, is already applying direct controls in the allocation and use of steel and certain other essential materials, and he has powers which he is prepared to use to extend these controls when that appears to be necessary and desirable. The government's views on this general problem of direct controls have already been fully stated toy the Prime Minister and by others earlier this session. The government's attitude toward direct controls is not based on theoretical or academic or ideological grounds; it is based on a completely practical appreciation of prevailing conditions and upon the estimated effectiveness of any proposed form of control in the given circumstances. I shall not repeat our views which are well known and well understood. If we reach a point where we believe a much wider range of direct controls would be in the national interest we shall use them, but we are not prepared to embark upon a premature program which under present conditions would in our judgment create more confusion than stability.
At the risk of some repetition, however, I would like to re-emphasize the extent to which higher prices are transmitted to Canada from abroad. More than one-fifth of everything we produce is exported, and about the same proportion of everything we consume is imported. In other words a large part of our price structure, certainly more than half its components, is directly determined by what others outside Canada charge us or will pay us. As my colleague the Minister of Defence Production (Mr. Howe) said last night, it would be possible to reduce substantially the price of meat in Canada, but only by placing an embargo on all cattle and meat exports. But if we want to retain the American market for our cattle-and in the long run it is essential- we in Canada must be prepared to pay as good a price for them as the Americans. We could reduce the price of clothing in Canada, but only by paying extremely heavy subsidies on imports of raw cotton and wool, on textile yarns and textile fabrics.. As my colleague
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said last night, raw cotton has gone up fifty per cent in price during the past nine months, and raw wool prices have doubled.
Under conditions of total mobilization our people and producers would, I am sure, accept if necessary the loss of markets, the detailed regimentation of their businesses and the denial of their normal freedom to bargain and to make free contracts. We are not in that position now. We hope, and we still have reason to believe, that the policies of peace and security that we are following in association with other free nations, will prevent the development of such conditions.
I have said something about what the federal government can and should do in these matters. It is equally important that provincial and municipal governments should follow comparable policies in their own spheres. Provincial and municipal expenditures, and the important public services which they sustain, are assuming increasing importance in the Canadian economy. In 1945 their net expenditures-that is, the expenditures of the provinces and the municipalities-totalled about $700 million, and in 1950 they exceeded $1,500 million. Total non-defence governmental expenditures in Canada at all three levels of government, excluding all intergovernmental transfer payments, have increased by about $1,000 million since 1945. In round figures $180 million of this increase has been at the federal level, $530 million at the provincial level, and $290 million has been in the municipalities. Both the provinces and the municipalities have highly essential functions to perform which require them to undertake a great deal of both small and large scale construction work. Having regard to the impact of defence on construction materials and skills I must again urge the provinces and municipalities to review particularly their capital and construction programs in the light of the general public interest.
Of the public at large, consumers and producers, farmers and merchants, businessmen and labour, I ask for restraint and good sense in all economic matters. I come back again to the fundamental importance of increasing efficiency and output. Statistics and charts in the white paper I have tabled indicate that there has been no measurable increase in per capita productivity during the past five years. This can be explained by the larger proportion of children and old people in our population. But if we are to carry greatly increased defence costs without having a definite fall in our standards of consumption we shall have to do better than this-we shall all have to work harder and Ipnger.
The Budget-Mr. Abbott
Greater output, however, is not just a matter of each of us working harder or longer. Productivity is also a reflection of efficient business management, and it calls for mutual confidence and the best possible working relationships between management and labour.
There is also urgent need for a higher volume of new saving, to cover the increase in capital investment which is in prospect, and to restrain the rising trend in consumer spending. This is certainly one of the best ways of reducing the intensity of competition for the use of labour and materials, and so reducing the upward pressure on prices. It is to the interest of every Canadian to make the maximum effort to save, or to increase the level of his saving, as a direct contribution to the avoidance of inflation and the successful prosecution of the defence program. The money saved can be used to buy Canada savings bonds, or to pay off the mortgage on his house or farm more rapidly, or to speed up the repayment of other debts, or to increase his savings in any other form that suits his individual circumstances. The important thing is to achieve an increase in aggregate saving up to a level at least equal to the new capital investment which we shall have to make this year.

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Turning now to a brief review of the government's accounts, may I again call the attention of hon. members to the detailed statements relating to these accounts in the white paper to which I have already referred. Of course it will be some time before the final figures for the year just ended will be available, and the figures I shall be using must, therefore, be regarded as preliminary and subject to revision.
In my statement to the house last September, I estimated our expenditure at $2,654 million and our revenue at $2,669 million. It now appears that our actual revenues for 1950-51 were about $3,105 million, our expenditures about $2,902 million, and as a consequence our budgetary surplus about $203 million.
The most notable feature of our financial operations has been the extraordinary buoyancy of our revenues, which reached an alltime peak and exceeded our estimates by $436 million. Our revenue, as hon. members are aware, is highly sensitive to variations in our production, trade, incomes and prices, and the unprecedented collections for the fiscal year are essentially a reflection of the high rate of economic activity generally during 1950, which began to accelerate in
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The Budget-Mr. Abbott April and May, and moved upward, much more rapidly after the outbreak of hostilities in Korea.
Direct taxes, which include personal and corporate income taxes and succession duties, yielded $257 million more than a year ago and account for half our total revenues. Indirect taxes, which include all customs and excise, have also shown a marked increase, yielding $201 million more than in 1949-50, and 40 per cent of the total.
The greater yield from direct taxes is primarily the result, on the one hand, of increased employment and higher incomes, and, on the other, of higher corporate profits earned during 1950. The record yield of $800 million from corporation income tax reflects in part the increase in corporate profits I have already discussed, in part the higher rates of tax imposed last September, and in part the provision introduced last year whereby private companies were allowed to capitalize their undistributed income on hand at the end of the 1949 taxation year upon payment of a tax of 15 per cent. As I said in my budget speech of March 28, 1950, it was impossible to predict what revenue would accrue from this 15 per cent tax, as no one could tell how many companies would take advantage of the new provision in the fiscal year. In fact, more than $90 million of tax has been paid by private companies under this provision.
The increased yield from indirect taxes is due, for the most part, to a larger volume of sales of consumer goods and services at higher prices, and, in lesser degree, to the impact of the additional commodity taxes introduced last September.
Our higher revenues are also the result of constantly improving efficiency in the Department of National Revenue. During the past two or three years a particularly good job has been done in streamlining procedures, speeding up assessments, and cleaning up arrears, as well as taking prompt and salutary action against fraudulent tax evaders. For this good work I should like to tender my particular thanks to my colleague the Minister of National Revenue (Mr. McCann) and his staff of senior officials.
I will not go into details of non-tax revenues or special receipts except to report on one item. Post office revenues have risen, but operating costs have also increased, with the result that on the usual basis, without adjusting for certain services rendered free or below cost to other departments and certain services or accommodation received without charge to it, the post office showed an operating deficit for the year. Details of all other items of non-tax revenues and
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special receipts which amount to $234 million will be found in the white paper.
Apart from the following three items, our estimates of expenditure have proved to be fairly close to the actual results for the fiscal year.
The house will recall that in my budget statement of September 7 I set a figure of $100 million for our estimated expenditures under the $300 million vote for the supply of military equipment and related services for our own use and for the use of our north Atlantic allies. I indicated at that time that this sum might be exceeded, and that indeed our aim would be to expedite this program by all possible means. We now expect that when the accounts for the year are closed they will show that we have made defence equipment, valued at $195 million, available to our north Atlantic friends, and consequently $95 million of the excess of our expenditures over our forecast may be attributed to this factor. Almost the whole of the remaining difference is accounted for by the two special items included in the further supplementary estimates for 1950-5] which were not foreseen last September, namely, the $65 million payment authorized to be made to the Canadian wheat board, and the special contribution of $75 million to offset in part the reported deficit in the superannuation account.
The most significant single feature of our expenditure has been the increase in national defence. Expenditures for the services and for defence research increased by about $190 million, and in addition, as I have already noted, supplies valued at $195 million were made available to our partners under the north Atlantic treaty. In all, our defence expenditures increased by $388 million to a total of $773 million. This amount is more than double the total defence outlay for the preceding year, and represents more than a quarter of all our expenditures for 1950-51.
In addition to the increases already mentioned, there was an increase of $22 million in payments for family allowances, old age pensions and pensions to the blind, and an increase of $20 million in the various payments to the provinces; but these were more than offset by reductions and savings in other items.
For example, there were significant reductions in expenditures for interest on the public debt, veterans benefits and government-owned enterprises. The saving of over $14 million in interest on public debt was due to the successive reductions in the debt which we have been able to achieve during the last five years. That of almost $19 million in veterans benefits is attributable to

decreases in payments of rehabilitation benefits, war service gratuities and reestablishment credits. The reduction of $44 million in the charges for government-owned enterprises is due primarily to the sharp decrease in the deficits of the Canadian National Railways. Further decreases were due to the absence of any item comparable to the charges in the 1949-50 accounts for the assumption by Canada of part of the Newfoundland debt or for the write-down of certain of our active assets to non-active account. There were also other savings, and. for particulars of some of these I would refer hon. members to the comparative tables of expenditures given in the white paper.
Following the practice of recent years, I have again provided for an addition of $75 million to the reserve for possible losses on our active assets. At March 31 loans, investments and other assets amounting in the aggregate to over $5,890 million were carried ora the books as active assets. The reserve held against these amounted to $396 million, representing approximately 7 per cent of the total. This I believe is a not unreasonable provision.
In summary, our revenues for the year just ended were $525 million more than for the preceding year, and while our expenditures also increased by $453 million we were nevertheless able to achieve a surplus of $203 million or $72 million larger than that of the year 1949-50. This surplus has involved a corresponding reduction in the net debt of Canada, and brings to $1,980 million the amount by which the government has been able to reduce the net debt during the past five fiscal years. I am sure it must be gratifying to hon. members, as it is to me, that we have been able to reduce our net debt by this substantial amount-an amount which is approximately equal to the increase in our debt during the first three and a half years following the outbreak of war in 1939.
I should also like to direct the attention of the house to that part of our financial operations which lies outside the budget proper. Cash receipts from and' cash payments to the public are more significant factors than budgetary revenues and expenditures in appraising the full effects of governmental financial transactions upon the Canadian economy. With this in mind I would like to refer briefly to those items in our budgetary revenue and expenditure accounts that do not involve the receipt or payment of cash, and also to those other cash receipts and disbursements which are dutside the budgetary accounts but which must be taken into account in order to appraise our over-all cash position.
The Budget-Mr. Abbott In addition to the provision for our general reserve and the usual interest credits and government contributions to annuity, pension and similar accounts, we have had the transfer to revenue of the excess provision for the refundable portion of the excess profits tax, the special government contribution to the civil service superannuation account, and the revaluation of our sterling and United States dollar assets and liabilities. Moreover, the transfer of existing stocks of equipment to our north Atlantic allies under the Defence Appropriation Act has not involved immediate cash disbursements. While during 1950-51 equipment valued at $195 million was transferred, disbursements for replacements amounted to only $20 million. When we take account of the above items and other cash receipts which do not constitute revenue in the budgetary sense, we find that a total of $792 million in cash was available during the fiscal year. Against this we must take into account the substantial disbursements we have to make during the year which are not budgetary expenditures. The largest and most significant of these were the advances to the foreign exchange control board to acquire gold or United States dollars. These amounted to $475 million. We have also made substantial loans to the Central Mortgage and Housing Corporation and to veterans under the Veterans Land Act for housing and settlement purposes. In the aggregate cash payments amounting to $612 million for loans and investments and other non-budgetary purposes which would otherwise have required additional borrowing were made out of available cash resources. This left an over-all cash surplus of $181 million. By using this amount and by letting our cash balances run down by $25 million, securities amounting to $90 million were acquired for the unemployment insurance fund and certain investment portfolios of the government, and in addition we were able to retire outstanding funded debt to a total amount of $116 million.
I shall not take the time of the house to discuss the balance sheet of Canada or explain the principal changes in our asset and liability accounts. Perhaps I should say, however, that the net debt of Canada at March 31, 1951, as presently estimated, was $11,441 million, that our total unmatured funded debt at the same date was $15,027 million of which less than 3 per cent is payable in London or New York, that the average coupon rate on this funded debt was unchanged at 2-60 per cent, and that our total public debt charges for the year 1950-51 amounted to $439 million, a decrease of about $12 million from the previous year.
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The Budget-Mr. Abbott

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Financial operations during the fiscal year included the redemption or refinancing of a heavy volume of matured or called bond issues in addition to the normal refunding of various issues of short-term securities.
In regard to our funded debt payable in Canada, the amount of our obligations, including refundable taxes, which matured or were called during the year, was no less than $3,771 million. We met $3,245 million of this amount by refunding or conversion into new issues, and $467 million by new borrowing in the form of Canada savings bonds and deposit certificates. The remaining cash required, $59 million, came from our cash surplus. After taking into account $22 million arising out of certain non-cash transactions, funded debt payable in Canadian dollars was reduced by $81 million during the fiscal year.
Our funded debt payable in United States dollars decreased by $74 million during the year. Of this amount $55 million resulted from the redemption on October 1, 1950, of an issue of 4 per cent bonds outstanding in the amount of $100 million (U.S.), which was refinanced in part by the issue of 2f per cent twenty-five year bonds in the amount of $50 million. This issue which was sold at par established a new low record for the cost of borrowing in the United States market by any foreign government. In addition, there was a reduction of $19 million in our United States dollar debt reflecting the change in the exchange rate resulting from the freeing of the Canadian dollar in September, 1950.
Our funded debt payable in sterling decreased by $5-7 million. This was in part due to the redemption of $2-9 million registered stock on May 1, 1950, and in part reflected the change in the exchange rate.
Thus, the over-all reduction in our funded debt during the year was $161 million, of which cash payments accounted for $116 million and exchange revaluations and adjustments for the balance.

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I now come to a consideration of our revenue and expenditure prospects for the new fiscal year, 1951-52. The main estimates which I laid before the house on March 12 provided for expenditures of $3,587 million. Of this amount $1,664 million is for defence, or approximately $893 million more than the estimated outlay for defence during the year just ended. The total estimate for our non-defence programs for the new fiscal year is $1,923 million. However, there will

as usual be supplementary estimates. On the other hand there will be offsets to these supplementary estimates. We shall spare no effort to achieve the maximum possible economies. Inevitably in any program of this magnitude there will be shortfalls in expenditures as compared with the estimates. The total amount of these savings is most difficult to forecast, particularly in a time of rising costs and prices, but I am confident that it will be fairly substantial. Taking all relevant factors into consideration, my best estimate is that our total expenditure during the present fiscal year will be of the order of $3,700 million, and I propose to budget on that basis.
On the revenue side, I base my forecast on the expectation I have noted earlier-that our gross national product will reach $20 billion. Should production and incomes continue to rise beyond that level-as well they might-I should expect my forecast to be more than realized. Should they go not quite that high, our revenues could fall short of the estimates I am now submitting.
However, on the basis of these assumptions I would expect that if we were to make no changes in our present tax laws, our total revenue would rise to about $3,325 million during the fiscal year. I have had the usual table prepared showing a comparison of the revenue forecast for 1951-52 with the preliminary figures for the year just closed, and for the convenience of hon. members and others, I ask the consent of the house to have this table printed in Hansard.
Forecast of Revenue
(Before tax	changes) .	Fiscal year 1950-51
	Fiscal year	(Actual
	1951-52	pre-
	(Forecast)	liminary)
	(In millions of dollars)	
Customs import duties ...	. $ 315-0	$ 298-0Excise duties 	. 245 0	245 0Sales taxes (net) 	. 495 0	459 1Other excise taxes 	
Other taxes	. 238 0	215-9Individuals 	. 785-0	652-0Corporations 	. 850-0	800-0Interest, dividends, etc. .	. 60-0	62-0Excess profits taxes 	100Succession duties 	. 40-0	34-0Miscellaneous taxes 	. 50	4-9Total tax revenues 	. $3,033-0	$2,780-0 'Non-tax revenue	. $ 242-0	$ 231-8Total ordinary revenue .	. $3,275-0	$3,012-7Special receipts and credits 50 0	92-6Grand total revenue 	. $3,325-0	$3,105-3
With estimated expenditures of $3,700 million and prospective revenues of $3,325

million it would appear that in the absence of any tax changes we would have a budgetary deficit of $375 million in 1951-52. However, before dealing with the tax changes which I shall recommend, I would like to refer to our prospective cash position and those extra budgetary cash receipts and disbursements which are so important from the economic standpoint in their impact upon our economy and in appraising the real significance of our financial operations for the year.
To this prospective budgetary deficit of $375 million we must add our probable cash disbursements for other than budgetary expenditures. In the replacement fund set up under the Defence Appropriation Act there is a balance of $175 million which is now available to the Department of National Defence for cash expenditures for the purpose of replacing existing stocks of defence equipment transferred to our north Atlantic allies during the fiscal year just ended. During the new year additional transfers to our allies are expected, but substantial cash disbursements for replacements will also be made, and these disbursements are likely to exceed the transfers to the replacement fund, although the actual amount of the excess is difficult to forecast. In addition, we shall in all probability require about $60 million for housing loans, possibly $15 or $20 million for Veterans Land Act advances, and there will undoubtedly be other loans and investments. Offsetting these will be the cash receipts in the annuity and pension funds and in the various trust and other accounts, including repayments of loans and advances made in previous years. All in all, I expect that our total non-budgetary cash disbursements will somewhat exceed our total nonbudgetary cash receipts. This is apart from any transactions in our own securities, and possible advances to or repayments by the foreign exchange control board resulting from changes in the size of our exchange reserves. It is, of course, not possible to forecast with any degree of assurance the extent of any change in these exchange reserves and I shall not attempt that hazardous exercise. From what has been said, however, it seems apparent that unless the repayment of advances by the foreign exchange control board equals the net excess of non-budgetary cash disbursements over non-budgetary receipts, our over-all cash deficit, assuming no changes in our present tax structure, would exceed the estimate of our budgetary deficit I have already given,
The Budget-Mr. Abbott

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I said a moment ago that we face a prospective deficit of $375 million. The first question is, what shall we do about it? In my mind, and I think in the mind of every hon. member, the answer is clear and must be unequivocal. No person with any sense of financial responsibility and having a clear view of our circumstances and our prospects could do other than conclude that we must increase our revenues by at least the amount of the deficit, that we must balance the budget, that we must follow a strict pay-as-we-go policy.
There is, of course, a certain arbitrary element about budget statistics. We do our budget arithmetic in terms of separate periods of time-the fiscal year. In reality the stream of income and the stream of expenditure are continuous though always changing. In some months the inflow exceeds the outflow, in others the process is reversed. Since the summer of 1950 the volume of flow in both streams has been steadily rising, though at varying rates. A year ago our total expenditures were $2-4 billion, in the year just closed they were $2 [DOT] 9 billion, this year they will be $3-7 billion. It will be clear that during the last few months of the past year the flow of expenditure was at a rate considerably above $2-9 billion a year, and during the last half of this fiscal year it will probably be running at a rate of about $3-9 billion a year.
It is my duty, therefore, to seek new revenues which will produce actual additional receipts of about $400 million in this fiscal year, but which will be yielding at a rate of about $600 million a year during the last six months of the year.
The next question is one of ways and means. It is generally agreed, I think, that we have an excellent basic tax structure. We arrived at this basic structure through a series of changes completed in 1948 and 1949. It consists of a well balanced blend of personal income taxes, corporation income taxes, succession duties and commodity taxes. The commodity taxes in turn comprise customs duties, the so-called general sales tax and the special excise taxes. This structure was designed to be simple and flexible, one that could be readily adapted by moderate changes in rates or in coverage to meet any reasonable scale of peacetime requirements.
I am reluctant to believe that we must inevitably face budgets of $4 billion or more for any considerable succession of years. There is still a possibility that reasonable solutions of the present international tensions may be developed. In another year's time we should have a clear view of the prospects. I have, therefore, decided not to recommend
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The Budget-Mr. Abbott any major reconstruction of our tax system this year but instead to meet our current requirements by a series of simple but adequate surcharges on several existing taxes and also to widen the coverage of our special excise taxes. I think that over the shorter run this method of defence surcharges will produce the necessary revenue with the least difficulty and inconvenience. If our optimistic hopes are realized it will be easy to reduce these surcharges or to drop them entirely, but I want to add that if it becomes clear that we are in for a long pull at these high levels of expenditure some major changes in the existing tax structure may have to be devised. My tax proposals, therefore, must be regarded as an interim policy for the period of the current year.
In proposing tax changes in times like these we must give consideration to the effects of the inflationary forces at work. Our principal economic objectives at this time must be greater efficiency, greater output, less nonessential capital investment, moderation in consumer spending, and an increase in personal savings. At the same time we would all wish to retain as free and as flexible an economic system as possible. Taxes operate on the economic system by diverting part of the income stream and by altering price relationships, and they have the effect of varying the intensity of incentives to produce and to spend or save. Any tax change will have some effect on incentives, or on spending, or on saving. Our problem is to get a good balance between taxes on earnings and taxes on spending. Taxes on spending, that is, taxes on commodities, do not adversely affect incentives to produce. In the case of taxes on commodities, government revenue is obtained not by reducing private income, but by placing a surcharge on private expenditure of certain kinds. This type of taxation has the advantage that it does not adversely affect the incentive to earn income, that is, to produce, and it does offer the consumer some choice as to whether he will spend, and pay the tax, or whether he will save and to that extent avoid the tax.
As I said earlier, the three principal inflationary forces presently at work in Canada are the rising prices outside Canada, the domestic capital investment boom which shows no signs of abating, and the fact that consumer spending power is outrunning the flow and production of consumer goods and services. There is little we can do about rising external prices, but we can do a good deal about the two domestic pressures and we have already done a good deal.

Consumer expenditures are being restrained by consumer credit regulations, as well as by the higher taxes introduced last September, and will be further affected by the higher taxes I shall be proposing a little later this evening. Taken together we think that these measures are adequate to the circumstances.
Heavy capital expenditures, on the other hand, are providing the most severe internal pressure and all signs point to increasing pressure from this source. In 1950 they were much more than double 1946 and 50 per cent above 1947. The reported' capital expenditure plans for 1951 indicate intentions to increase them by a further 15 per cent over 1950, but it may be doubted whether such an increase is physically possible.
Capital expenditures are much more difficult to hold within bounds. Monetary and credit policies are having a restraining effect, but a large proportion of business corporations still have a highly liquid position and to that extent are less affected by these financial controls. The increases in corporation income taxes which I shall be proposing will drain off substantial amounts of corporate profits but the total volume of profits remaining in corporate hands will still be sufficient to maintain and, in some cases, to increase the capacity of corporations to plan additional capital investment without recourse to borrowed funds. Ordinarily this is a good thing both for the corporations and for the country, but under present conditions all expenditures of this sort that are not essential should be postponed.
Steel and related controls will place considerable restraints on less essential capital expansion, but they will not directly affect certain kinds of investment. In fact they could have the result of intensifying competition for such other materials and labour as are available. To embark upon all-out direct construction control would be an almost impossible task, as the experience of 1944-45 indicated.
What we need is a stiff financial deterrent that will affect particularly the businessman who is considering the kind of investment which is attractive, not because of its longterm soundness, but because it can be written off out of the expected high profits of the next few years at a time when he expects the rate of corporate income tax to be abnormally high.
To provide this deterrent it is proposed to defer for a period of four years the right to charge depreciation on all capital assets

acquired after April 10, 1951, excepting certain classes of assets defined in the regulations and certain additional kinds of assets when certified as eligible by the Minister of Trade and Commerce.
The principal classes of assets which will still be eligible for current depreciation without a certificate will be those acquired
(a)	for the production and distribution of electricity, gas and water; the provision of telegraph and telephone services; pipe lines, gas and oil well equipment; lumbering equipment; patents and franchises.
(b)	for use by individuals in farming, fishing, or a professional service.
The principal kinds of assets in respect of which the Minister of Trade and Commerce will be authorized, in his discretion, to issue certificates of eligibility for current depreciation will be those necessarily acquired for
(a)	defence purposes;
(b)	the production and distribution of primary products in the farming, fishing, mining, petroleum, lumber and pulp and paper industries;
(c)	direct use in a transportation or communication business.
Under the proposal, the right to charge depreciation as an expense is deferred, not cancelled or even diminished. For example, $10,000 of ineligible assets acquired after April 10, 1951, will earn no depreciation for tax purposes during the next four years; but in 1955 it can be transferred to the depreciable asset account at its full original cost. If it is a type of asset that can be written off in, say, 10 years, it will be written off in 1955-64 instead of in 1951-60.
The deterrent will particularly affect the businessman whose decision to make a capital expenditure is strongly* influenced by the expectation that he can write off a large fraction of his cost at a time when both profits and tax rates are abnormally high, particularly if it is a kind of investment with uncertain profit-making possibilities six or eight years hence. In other words it will compel the businessman to give primary attention to the long-term prospects of proposed capital expenditures and if outside financial participation is required lenders will also take this view.
There will, therefore, be a stiff deterrent on projects of uncertain long-run value and also on capital expenditures on frills, gadgets and generally "dressing up" offices, stores and buildings. This deterrent should reduce the competitive scramble for scarce materials
The Budget-Mr. Abbott and equipment and thus place less strain on direct controls. Such materials and equipment will tend to go to those who can make the best long-term use of them. Bidders who are anticipating short-run quick profits will tend to withdraw from the market. One further advantage is that the government will not be telling anyone that he cannot do this or that. What will happen is that a financial penalty will be put, in the short run, on those who go ahead with less essential expenditures.
These revised depreciation regulations will go into effect immediately and will apply to all capital assets acquired after April 10, 1951. A copy of the regulations which have been approved by the governor in council will be tabled at the close of my address and my colleague, the Minister of Trade and Commerce, will be issuing an explanatory statement within a day or two.
I turn now to my proposals for tax changes for this year.
The field of the corporation income tax is a difficult one, and one which I have to approach with a particularly keen sense of responsibility for the real national interest, because the general public does not, I am afraid, fully understand the implication of these taxes. It would be only too easy to take a superficially popular line and increase these taxes to a point which while yielding large immediate revenues would do grave damage in the longer run to the economy as a whole.
I shall not repeat what I said about the excess profits tax last September. I still believe that it is not a sound tax except under very special circumstances, and I do not believe we have reached that point. A part of what I said about the excess profits tax, namely, that it blunts the goad to efficiency and that it invites waste, applies also to high rates of corporation income tax. It is, of course, a question of degree. I say quite frankly, however, that I am not happy about corporation tax rates when they go over 50 per cent. I think it is bad psychology to permit people to say that more than half of any income earned, or any savings made, will go to the government.
There is also the point that corporation taxes involve double taxation; we tax the corporation on its profits, and then we tax the shareholder again on his dividends. Moreover, we have always relied on undistributed corporation profits to provide a large fraction of the capital required for expansion of our industries. At this juncture in our
[Stage Direction]
The Budget-Mr. Abbott affairs, with heavy capital investment contributing to inflationary pressure, I shall not be too much concerned if higher tax rates leave less for reinvestment, but in the long run it is a good thing for the country that business should grow out of reinvested profits.
Having weighed all these factors I have come to the conclusion that the right policy at this time is to impose a defence surcharge of 20 per cent on all corporation income tax payments in respect of income earned after January 1, 1951, in addition to the 5 per cent higher tax rate imposed last September. This 20 per cent surcharge will apply only to profits now taxed at the 38 per cent rate. It will not apply to the rate of 15 per cent which applies to the first $10,000 of profits.
I am conscious of the fact, however, that this 20 per cent surcharge will weigh very heavily on those kinds of companies which for a variety of reasons, public control of rates or otherwise, are never able to earn more than a very modest rate on their capital. To such companies the next few years can offer little expectation of increased profits, yet many of them are engaged in activities which will require them to raise very large sums of additional capital for essential expansion. If we are not to cripple their borrowing capacity we must not cripple their capacity to earn their normal profits after tax. For these reasons I propose that the 20 per cent defence surcharge shall not operate so as to reduce the net income after federal tax, but before any provincial income taxes, of any company to a point below a 5 per cent return on capital employed.
Apart from this abatement the effect of the 20 per cent defence surcharge is to raise the rate of tax on all profits over $10,000 from 38 per cent to 45-6 per cent. It must be remembered that there are also provincial corporate income taxes.' In the eight provinces with tax rental agreements it is 5 per cent, and in Ontario and Quebec it is 7 per cent. This means that the marginal rate of combined tax will be just over 50 per cent in eight provinces, 52-6 per cent in Ontario and Quebec.
If this 20 per cent defence surcharge wrere applied to all profits its yield would be about $115 million in this fiscal year, and about $170 million in a full year. The abatement I have mentioned will cause some reduction in this yield. On the other hand, we shall pick up some additional current revenue incidental to the policy I have announced regarding deferred depreciation. What this amount will be cannot be more than an informed guess. I am inclined to the view that this increased
revenue will be rather more than the loss from the abatement of the surcharge and I have, therefore, put down $116 million this year and $175 million in a full year as my increased revenue from the corporation income tax.
There will in addition be a number of technical changes in the law covering corporation taxes, but none of these will have any significant economic or budgetary implications.
I turn now to the personal income tax. In line with my earlier statement that I wish to upset the present tax structure as little as possible this year, I am proposing to leave the exemptions and the percentage rate structure unchanged and rely upon a straight defence surcharge for the revenues we require. This surcharge will be 20 per cent on the amount of tax payable under the present rate structure and will take effect as from July 1, 1951. This means that the tax payable for the whole calendar year of 1951 will be increased by ten per cent, but commencing July 1 all payroll deductions will be one-fifth greater than in the present deduction tables and all other pay-as-you-earn instalments will be increased by one-fifth. With the permission of the house I shall insert in Hansard at this point the usual tables illustrating the effects of this surcharge.
Present and Proposed Income Tax Single Taxpayer
Increase in Tax In a Full
Income	1950 Tax	1951 Tax	In 1951	Year$	$	$	$	$1,000	1,200	30	33	3	61,500	75	83	8	151,800	120	* 132	12	242,000	150	165	15	302,250	193	212	19	392,500	235	259	24	472,750	278	306	28	563,000	320	352	32	643,500	415	457	42	834,000	510	561	51	1025,000	700	770	70	1407,500	1,270	1,397	127	25410,000	1,960	2,156	196	39220,000	5,960	6,556	596	1,19230,000	10,660	11,726	1,066	2,13250,000	21,814	23,995	2,181	4,36375,000	37,264	40,990	3,726	7,453100,000	53,714	59,085	5,371	10,743200,000	126,414	139,055	12,641	25,283400,000	283,114	311,425	28,311	56,623
Note: In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.
tMr. Abbott.]

Present and Proposed Income Tax Married Taxpayer-No Children
Increase in Tax
In a Full
Income	1950 Tax 1951 Tax	In 1951	Year?	?	$	$	$2,000	2,250	38	42	4	82,500	75	83	8	152,750	113	124	11	233,000	150	165	15	303,500	235	259	24	474,000	320	352	32	645,000	510	561	51	1027,500	1,030	1,133	103	20610,000	1,660	1,826	166	33220,000	5,510	6,061	551	1,10230,000	10,160	11,176	1,016	2,03250,000	21,264	23,390	2,126	4,25375,000	36,664	40,330	3,666	7,333100,000	53,064	58,370	5,306	10,613200,000	125,714	138,285	12,571	25,143400,000	282,364	310,600	28,236	56,473Note:	In calculating	the above	taxes it	has been
assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.
Present and Proposed Income Tax
Married Taxpayer with Two Children Eligible for Family Allowances
Increase in Tax
In a Full
Income	1950 Tax	1951 Tax	In 1951	Year$	?	$	$	$2,300	2,400	15	17	2	32,500	30	33	3	62.750	68	75	7	143,000	105	116	11	213,500	184	202	18	374,000	269	296	27	545,000	453	498	45	917,500	964	1,060	96	19310,000	1,582	1,740	158	31620,000	5,375	5,913	538	1,07530,000	10,010	11,011	1,001	2,00250,000	21,099	23,209	2,110	4,22075,000	36,484	40,132	3,648	7,297100,000	52,869	58,156	5,287	10,574200,000	125,504	138,054	12,550	25,101400,000	282,139	310,353	28,214	56,428
Note: (1) The above figures show the actual income tax liability of a taxpayer with family allowance children but in order to arrive at his true net position the amount of family allowances received for his children must be offset against his tax liability.
(2) In calculating the above taxes it has been assumed that all incomes up to $30,000 are entirely earned incomes, and that incomes of more than $30,000 include income of that amount and additional investment income to make up the total. No account has been taken of the 10 per cent tax credit for dividends from Canadian corporations.
When hon. members have an opportunity to study these tables they will find, tor example, that the married man with no children earning $2,500 will have his tax
The Budget-Mr. Abbott increased by something less than 30 cents a week. The $5,000 a year man will pay an additional $8.50 a month; the $10,000 a year man will pay an additional $28 a month, and so on. Starting July 1 every taxpayer will pay a rate one-fifth higher than he has been paying. This 20 per cent defence surcharge on personal incomes should yield $85 million this year, and $158 million in a full year.
There will be a number of other amendments to the Income Tax Act.
Authority will be requested for a simplified income tax system for members of the armed forces under which their full income tax liability in respect of service pay may be met by appropriate deductions from their monthly pay.
Expenditure on certain drugs will be allowed1 in computing deductible medical expenses.
Provision will be made for the deduction, in computing income from wages and salaries, of professional membership dues and certain other cost items where the professional status is required to be maintained by the terms of the employment or where such costs are required by the contract of employment to be assumed by the employees. Similarly, provision will be made for the deduction of union dues.
The 15 per cent tax on undistributed income of private companies will be made available to all companies, but the right of controlled companies to pay in respect of surpluses accumulated from 1950 onward will be withdrawn.
The right of corporations to file consolidated returns will be withdrawn in respect of taxation years ending after December 31, 1950.
The special provisions regarding exploration expenses incurred by mining and oil companies will be extended for a further year.
Minor adjustments will be made in respect of lump sum accumulations of income received in a year, investment counsel fees, charitable foundations, farm losses and "related companies".
A few other technical amendments will be contained in the bill but I need not refer to them at this time. As hon. members will note, some of the above amendments will increase revenue and others will decrease it. On balance I estimate a net increase in revenue from all these items of about $10 million.
I turn now to our third broad field of taxation, that of commodity taxes.
[Stage Direction]
The Budget-Mr. Abbott
We propose to make no changes in the present scale of taxes on alcoholic beverages. Last September we increased these taxes by $22 million a year. The rates are now high, and I am aware that whenever we change these taxes we impose a good deal of inconvenience and some confusion upon the provincial authorities.
We propose, however, to increase the taxes on cigarettes and on manufactured tobacco. The cigarette tax is now $10 per thousand, and I am recommending an increase of $1.50 or a total of $11.50 per thousand, effective midnight tonight. This change will yield us $21 million this year and $26 million in a full year.
For some years now we have had a tax on cigarette papers and cigarette tubes which are used by those who "roll their own". This tax has become difficult to administer. I propose to repeal this tax and substitute for it a'higher tax on manufactured tobacco. To keep a reasonable proportion between the traditional relationship between the taxes on cigarettes and tobacco I am recommending an increase of 48 cents a pound on manufactured tobacco. A proportionate increase is also proposed with respect to the tax on raw leaf tobacco. I estimate that these changes will give us an additional $8 million this year and $9 million in a full year over and above the loss of revenue on cigarette papers and tubes.
Next I come to what we call the special excise tax, that is the tax now imposed at a rate of 15 per cent on such things as motorcars, radios, household electric appliances, cameras, jewelry, cosmetics and so on. We propose that this tax be increased to a rate of 25 per rent.
The house will also recall that last September we deliberately decided not to place this special tax on refrigerators, stoves and washing machines. I regret that we can no longer afford to leave these entirely free of extra tax, and I am recommending that a tax at 15 per cent be levied on all mechanically operated domestic refrigerators and washing machines and on all domestic cooking stoves except those designed to use coal or wood only.
In September a tax of 30 per cent was imposed on all candy, confectionery and chewing gum. Experience has shown that this rate has been too severe, and its effects upon the industry have been out of proportion in comparison with other taxed industries. We propose, therefore, to reduce this rate to 15 per cent.
These, like all other commodity tax changes, will be effective at midnight tonight.
As usual I must give public notice that no claims for refund arising out of tax reduc-

tions in respect of goods on which tax has been paid will be entertained by my colleague, the Minister of National Revenue.
I estimate the increase from 15 per cent to 25 per cent in existing taxes after taking account of the reduction in the tax on candy will yield an extra $44 million this year and $54 million in a full year. The new items to be taxed at 15 per cent should produce about $16 million this year and $21 million in a full year.
Finally I have given very careful thought to the so-called general sales tax. I say "so-called general sales tax" because it is really very far from being such. Our present sales tax has a very long list of exemptions. About ninety-five per cent of all foods are free of sales tax. All fuels and all building materials are exempt. I think it is safe to say that two-thirds of the average Canadian family's total spending is not touched by the sales tax. Contrary to the frequent assertion, the sales tax does not strike a higher proportion of the expenditures of the low income group. Calculations based on recent family budget studies made by the dominion bureau of statistics indicate that in the lowest income groups only about one-quarter of total income is spent on goods subject to sales tax; at the $3,000 a year level about one-third of the family income is spent on goods subject to this tax. This 33 per cent of income spent on taxed commodities extends to beyond the $6,000 a year level. Only when incomes exceed $7,000 or $8,000 a year does the proportion of income spent on goods subject to sales tax star! to decline, and this is just about the point where our income tax starts to become sharply progressive. To say that our sales tax is a harsh regressive tax simply is not true.
If hon. members have succeeded in following my estimates of additional tax yields they will realize that my proposals so fai leave me about $100 million short of mj necessary objective of $400 million to balance this year's budget. My range of choice tc secure this remaining $100 million is reallj limited to more than doubling the increase ] have already proposed in the personal income tax, which could only be achieved by a sharj lowering of exemption levels, or an increase in the sales tax. I do not say that we have reached the practicable limits of the income tax. Of course we have not. The new rates we are proposing are much below the peal rates of 1943 and 1944. But experience has shown that you cannot increase income taxes by too much in any one year without creatinj serious embarrassment to large numbers o: people in all income groups, and withou' seriously affecting economic incentives.

I have therefore come to the conclusion that the sound thing to do from the economic point of view, and the fair thing at this time, is to increase the sales tax. I believe also that this is the choice that will be preferred by the great majority of our people. We are not recommending any change whatever in the coverage of the sales tax, but we are proposing that its rate be increased from 8 per cent to 10 per cent, effective immediately. I estimate that this will yield additional revenue of $105 million this year and $125 million in a full year.
Finally, I have certain tariff changes to propose. The tariff negotiations which have been taking place at Torquay during the past six months have just been concluded. The purpose of these negotiations was to extend the Geneva and Annecy agreements for another three-year period, to increase the scope of these agreements by including more countries and a wider range of commodities, and further, to arrange for additional reciprocal concessions on products previously negotiated. The Canadian delegation has concluded negotiations, providing for further reciprocal concessions, with sixteen countries including the United States. It has been arranged between the countries represented at Torquay that the details of the agreements resulting from the negotiations will be announced by the participating governments on May 9. Consequently I am not in a position to review the results at this time.
The budget resolutions relating to the customs tariff which I am tabling contain proposals to carry out certain recommendations of the tariff board and to provide for reductions in a number of duties which would lower costs of production in our great primary industries of agriculture, mining and fishing. Other changes proposed would achieve improvements in the wording and classification of several items so as to remove anomalies and to facilitate administration.
Two years ago I referred the plastics and synthetic resin items in the tariff to the tariff board for inquiry and report. These items were last examined by the board in 1937. In view of the rapid technical changes which have been taking place in this new and expanding industry, it is not surprising that the existing items in the tariff have become obsolete. Because of the highly technical factors involved and the complexity of the problem I felt it particularly desirable to have a thoroughgoing inquiry by the tariff board before recommending any action. The exhaustive examination which the board has undertaken is not yet completed, but the board is of the opinion that
The Budget-Mr. Abbott there are certain special and pressing difficulties which should be dealt with at this time. Consequently the board has submitted an interim report in which it recommends the insertion of certain items into the tariff prior to submission of its full conclusions covering the whole of the synthetic resins and plastics field. I have included these recommendations in the changes which I am proposing in the budget resolutions. The board's recommendations are designed to achieve up-to-date provisions respecting both classification and rates. The rates recommended involve some increases and some decreases in existing rates of duty. The reasons which led the board to recommend these readjustments are fully set out in its interim report which I am tabling with the budget resolutions.
The other tariff proposals include changes which would widen the application of certain items pertaining to farm - equipment. They would provide for the free entry of such things as grain or hay driers, individual sprinkler irrigation systems and several items of dairy equipment when for use on the farm. Most of these were recommended to the government in the brief submitted by the federation of agriculture. The free entry of these items would be of considerable assistance to our farmers and is in accord with the government's policy, stated by my predecessor, Eight Hon. J. L. Ilsley in his budget speech of 1944, regarding the free entry of farm implements and machinery.
In respect of the fishing industry two changes are proposed. One would permit the free entry of diesel engines for installation in boats usedi exclusively for commercial fishing operations and the other would widen the provision for free entry of nets and lines to include nets and lines made of any material. Both my colleague, the Minister of Fisheries, and I have received many representations that these changes would be of significant assistance to the fishing industry. In view of the heavy dependence of the industry upon export markets it is in the general interest to reduce, wherever practical, tariff barriers which add to costs.
The changes proposed in the customs tariff affecting equipment used in the mining industry would widen the existing provisions to permit the entry of unfinished parts of the equipment specified, at the same reduced rates as are now granted to the fully finished parts. In a number of cases the provisions would be extended to cover additional items of equipment used in mining operations.
An amendment is proposed to the tariff item dealing with settlers' effects. A number of countries from which we seek to obtain immigrants find it necessary, owing to the
[Stage Direction]
The Budget-Mr. Abbott shortage of exchange, to apply restrictions on the transfer of emigrants' capital. These restrictions have operated as a deterrent to the movement of desirable immigrants into Canada. The new subsection which I am proposing to add would, in these cases, permit the free entry of settlers' effects during a period of three years from the time of the settler's first arrival. This would enable the settler to use his frozen capital to purchase and bring in from his country of origin such things as household effects, wearing apparel, tools of trade and agricultural equipment, after the settler has been here and has had1 an opportunity to decide what he and his family need most urgently. This new provision should make it possible for many desirable immigrants to establish themselves more rapidly in productive activity in this country.
Finally, I am proposing an amendment to tariff item 708. This would remove obsolete language and would enable the government to carry out reciprocal' customs arrangements regarding certain matters with other signatories of the North Atlantic treaty. These would apply to supplies for defence establishments located in one another's territory in accordance with jointly agreed plans for our common defence.
The net effect of all these tariff changes on the total of all customs revenues will not be significant.
I think it will be convenient to hon. members if I insert at this point a table summarizing the revenue effect of all these tax changes.
Effect on Revenue of Proposed Tax Changes
In Fiscal In a Full Year	Year
? $ (millions)
Personal income tax
20 per cent surtax ...	... 850	158 0Corporation income tax 20 per cent surtax and deferred depreciation	... 1160	175 0Other income tax changes	... 10-0	100Sales tax Increase in rate to 10 per cent 	... 1050	1250Excise taxes Increase in 15 per cent rate to 25 per cent ..	52 0 ...	630	Reducing confectionery tax to 15 per cent ..	-80 ...	-90	Net increase	440	540

New 15 per cent tax on refrigerators, stoves and washing machines Increase in cigarette
tax	
Increase in tobacco tax Repeal of tax on cigarette papers	
Net increase	
Total	
It will be noted that in a full year I expect to get an additional $185 million from corporation taxes, $158 million from personal income taxes and $235 million from commodity taxes. In this fiscal year, largely because of the three-month lag in income taxes, I expect to get $126 million from corporations, $85 million from personal income tax and $194 million from commodity taxes.
As usual at this point I should like to insert another table showing a revised estimate of total revenues for 1951-52 after giving effect to the proposed tax changes.
Revised Forecast of Revenue for Fiscal Year 1951-52 Taking Account of Tax Changes
Increase in revenue in
	Forecast	fiscal year	Revised
of revenue		1951-52 forecast oi	
from	from	revenueexisting	budget	fortaxes	proposals	1951-52?	$ (millions)	$Customs duties	3150	315 0Excise duties	245 0	245-0Sales tax (net) 	495-0	105-0	600-0Other excise taxes	238-0	89-0	327-0Personal income tax Corporation income	785-0	850	870-0850 0	126-0	976-0Interest and	dividends	60-0	60-0Succession duties ...	40-0	40-0Miscellaneous taxes .	50	50Total tax revenue..	3,033-0	405-0	3,438-0Non-tax revenue ..	242-0	242-0Total ordinary	3,275-0 50-0	405-0	3,680-0 50-0Special receipts ....	Total receipts	3,325-0	405-0	3,730-0
This table shows estimated revenues at $3,730 million. Earlier in my speech I forecast our total expenditures at $3,700 million. I am therefore budgeting for a surplus of $30 million.
In Fiscal Year 1951-52
In a Full Year
(millions)
... 210 ... 140 ...	170
260
-6 0	...	-8 0	...
8 0	9 0
4050	5780

I should repeat, Mr. Speaker, that all these estimates assume a high level of employment throughout the country, at least average agricultural crops, and a basic price level not very much higher than that which now prevails.
These then are the proposals which we recommend to the house in order to meet our financial requirements. None of us can tell what the future has in store. The taxes we have proposed should yield total revenues of about $3,900 million in a full year. It would be too bold to hope that conditions a year hence will permit any reductions in these rates of tax. There can be some hope, but certainly no assurance, that tax rates next year may not have to go higher.
It is an inexorable rule of life that we can never really get something for nothing. Nothing is really free. Everything worth while has its costs. Tonight is the annual occasion when we count up the cost of our policies in terms of money. That cost is high, but failure to achieve our objectives of peace, security and financial integrity would involve infinitely greater and more painful cost.
Mr. Speaker, I wish to table the various resolutions which I shall move when the house is in committee.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That, in respect of income earned after the commencement of the 1951 calendar year, a corporation shall pay a defence surtax for the year equal to 20 per cent of that portion of its ordinary income tax for the year that is computed at the 38 per cent rate, or the 33 per cent rate if applicable, (before allowance is made for tax credits) subject to a right to a refund of such tax to the extent that it would reduce the corporation's taxable income after payment of ordinary income tax to an amount less than 5 per cent of its capital employed.
2.	That an individual shall pay a defence surtax equal to
(a) for the 1951 taxation year, 10 per cent and
(b) for each subsequent taxation year, 20 per cent of his ordinary income tax (including investment surtax) for the year before allowance is made for tax credits.
3.	That, for the purpose of computing income from an office or employment for the 1951 or a subsequent taxation year, there may be deducted certain amounts paid in respect of
(a)	travelling expenses that the officer or employee was required by the contract of employment to incur,
(b)	professional membership dues where the officer or employee was required by the contract of employment to maintain his professional status,
(c)	office rent or salary to an assistant or substitute required by the contract of employment to be paid by the officer or employee.
The Budget-Resolutions
(d)	supplies consumed directly in the course of the employment for which the officer or employee was required by the contract of employment to pay, or
(e)	Union dues.
4.	That the governor in council be authorized to make regulations under which the income tax of members of the armed forces on their service income will be paid in full in respect of the pay and allowances of each pay period by a deduction therefrom in accordance with a special table subject to the right of any member to file a return on an annual basis.
5.	That the right to elect to pay the 15 per cent tax on its undistributed income now enjoyed by a private company
(a)	be extended to all other corporations, and
(b)	be withdrawn, effective April 10, 1951, from a corporation that is controlled by another corporation except in respect of its undistributed income on hand at the end of the 1949 taxation year.
6.	That for the 1951 and subsequent taxation
years the provision under which the 15 per cent tax rate on the first $10,000 of income of a corporation applies to only one of several related corporations be amended so as not to include in the class of related corporations those controlled by persons not dealing at arms length unless such persons own shares in the capital stock of both corporations.	'
7.	That for the 1951 and subsequent taxation years, payments made for insulin, cortisone, adrenocorticotrophin (ACTH), liver extract injec-tible for pernicious anaemia and vitamin B12 for pernicious anaemia purchased under a physician's prescription may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
8.	That special deductions from income to taxpayers whose principal business is the production, refining or marketing of petroleum or petroleum products or the exploring or drilling for oil or natural gas or mining or exploring for minerals, be allowed for expenses incurred in the 1954 operations on the same basis as for expenses incurred in the operations in the years 1951 to 1953.
9.	That special deductions from income and taxes to taxpayers whose principal business is production, refining or marketing of petroleum or drilling for petroleum be allowed for expenses incurred in respect of deep-test oil wells in 1952 operations on the same basis as for similar expenses in 1950 and 1951 operations.
10.	That the exemption of the income from a metalliferous or industrial mineral mine for the first three years of production now applicable to mines that came into production during the years 1946 to 1952 be extended to mines coming into production in the years 1953 and 1954.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:
1.	That the rate of the general sales tax be increased from eight to ten per cent and that the rate of sales tax on those articles at present subject to four per cent be increased to five per cent.
2.	That the excise tax on goods mentioned in schedule I of the act, and on furs, that are at present subject to the rate of fifteen per cent be increased to twenty-five per cent.
[Stage Direction]
The Budget-Resolutions
3.	That the excise tax on candy, chocolate, chewing gum and confectionery that may be classed as candy or a substitute for candy, be reduced from thirty to fifteen per cent.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on the following goods when adapted to household or apartment use:
(a)	stoves, hot plates, grills and other appliances when adapted wholly or in part for cooking and when designed for using other than solid fuels;
(b)	washing machines operated by electric or other power;
(c)	electric, gas or kerosene refrigerators and freezing equipment and complete parts therefor including coils, condensing or compressor units, motors, cabinets, boxes, evaporators and expansion valves.
5.	That the excise tax on cigarette papers and cigarette paper tubes be repealed.
6.	That the excise tax on the following goods be increased by the amounts shown:
(a)	for each five cigarettes or fraction of five
cigarettes contained in any package	
three-quarters of one cent;
(b)	for each ounce or fraction of an ounce of manufactured tobacco, including snuff but not
including cigars and cigarettes, contained in any package	three cents;
(c)	for each ounce or fraction of an ounce of Canadian raw leaf tobacco when sold for consumption in Canada	three-quarters of one cent.
7.	That the sales tax on the following goods be repealed:-
(a)	cortisone;
(b)	adrenocorticotrophin (ACTH).
8.	That any enactment founded upon this resolution be deemed to have come into force on the eleventh day of April nineteen hundred and fifty-one.	.

[Stage Direction]
1. Resolved, That schedule A to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, be further amended by striking thereout tariff items 216f, 296e, 386 (p), 403(e), 409f, 410g, 410h, 419i, 410j, 4101, 410o(i), 410p, 410q, 410r, 410s, 410t, 410u, 410v, 410w, 410x, 410z, 435, 440k, 475, 523g, 682, 705, and 708, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
[Mr. Abbott. J
Tariff Item	-	British Preferential Tariff	Most- Favoured- Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most-Favoured-Nation Tariff	General Tariff216f	Materials of a kind not produced in Canada when im-	ported for use only in the manufacture of the goods	specified in tariff items 237(a), (b), (c) and (d), 238,	238a, 2386, 238c, 238<f, 238c, 238/and 238p	Free	Free	Free	Free	Free	Free(various)	(various)	(various)238	Synthetic resin sheets, film or sheeting, not less than	6 inches in width, n.o.p., synthetic resin lay-flat	tubing, not less than 6 inches in circumference,	n.o.p:-	(a) Phenol-aldehyde type, not further manufac-	tured than cast	Free	Free	Free	(b) Acrylic type, not further manufactured than	moulded or cast	Free	Free	Free	(c) Polyethylene type	(i) Plain, uncoated, undecorated	10 p.c.	10 p.c.	10 p.c.	(ii) Other	15 p.c.	15 p.c.	15 p.c.	Free	Free	Free(d) Vinyl type, except vinylidene	15 p.c.	20 p.c.	25 p.c.(i) Plain, uncoated, undecorated	15 p.c.	15 p.c.	15 p.c.	(ii) Other	15 p.c.	20 p.c.	25 p.c.	(e) Vinyl typo, vinylidene	(i) Plain, uncoated, undecorated	Free	Free	Free	(ii) Other	Free	Free	Free	(/) Other type	(i) Plain, uncoated, undecorated	Free	Free	Free	(ii) Other	10 p.c.	10 p.c.	10 p.c.	277	Oils, hydrogenated, blown, dehydrated or sul-	phonated, not including blown or hydrogenated fish	fo August 27th, 1950	seal or whale oils	15 p.c.	20 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.From August 28th, 19£	0296e	Magnesium oxide and magnesium carbonate, not	Various	Various	Variousfurther manufactured than ground, when imported	by manufacturers of insulating materials for use	#	exclusively in the manufacture of such insulating	Free	FreeFree	15 p.c.	25 p.c.
The Budget-Customs Tariff

British
Preferential
Tariff
Tariff
Item
(v) Sheets or strip, of iron or steel, hot or cold rolled, with silicon content of 075 per centum or more, when imported by manufacturers of electrical apparatus or of parts therefor, for use in the manufacture of electrical apparatus or of parts therefor, in their own factories	
Free
(e) Steel wire, coated or not, when imported by manufacturers of machine card clothing for use exclusively in the manufacture of machine card clothing, in their own factories	
Free
409f
Grain crushers; grain or hay grinders; grain or hay dryers; milk coolers; steel stanchions for confining livestock either in pens or individually, including complete equipment for milking parlors; automatic stock watering bowls; barn litter carriers and track; sprinkler irrigation systems; barn hay forks, carriage, pulleys and track; all the foregoing for use on the farm for farm purposes only; hay loaders, hay tedders, potato planters, potato diggers, fodder or feed cutters, ensilage cutters, post hole diggers, snaths, stumping machines, grain loaders or elevators with a capacity not exceeding 40 bushels per minute and all other agricultural implements or agricultural machinery, n.o.p., and complete parts of all the foregoing	
Free
Mostr Favoured-Nation Tariff	General Tariff	Rates in Effect Prior to Rates Proposed in this Budget	British Preferential Tariff	Most-Favoured-Nation Tariff	General Tariff12$ p.c.	12J p.c.	Free	121 p.c.	121 P-c.7J p.c.	20 p.c.	20 p.c.Free	Free	Free	Free	Free15 p.c.	30 p.c.	30 p.c.Free	Free	Free	Free	Free20 p.c.	20 p.c.	30 p.c.Free	221 P-o.	30 p.c.15 p.c.	221 pc.	30 p.c.20 p.c.	22| p.c.	30 p.c.10 p.c.	25 p.c.	35 p.c.Free	10 p.c.	35 p.c.Free	15 p.c.	35 p.c.15 p.c.	20 p.c.	30 p.c.Free	20 p.c.	30 p.c.15 p.c.	221 P-o.	371 p.c.
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The Budget-Customs Tariff﻿410a
410g
410h
410i
(iv) Mine car loaders, self-propelled, single-bucket type, the bucket of which loads at the front and moves over the loader to discharge at the rear, n.o.p., and parts thereof, for use exclusively in mining operations	
rticles for use exclusively in the metallurgy or smelting of iron, viz.: machinery and apparatus for sintering or nodulizing iron ore, concentrated or not, or flue dust; machinery and apparatus for use exclusively in the construction, equipment and repairs of blast furnaces for smelting iron ore, such machinery and apparatus to include hot blast stoves and burners, blast piping and valves connecting the blowing engines with the furnace, scale cars, charging and hoisting apparatus, blast furnace gas piping, cleaners and washers; and parts of all the foregoing, but not to include wrought iron pipe or valves 10^ inches and under in diameter, nor structural iron work	
Equipment and parts thereof for distributing stone dust in mines	
(1)	Miners' rescue appliances, designed for emergency use in mines, where artificial breathing is necessary in the presence of poisonous gases, including high pressure oxygen pumps for use exclusively in connection with such appliances, and automatic resuscitation apparatus for artificial breathing to aid in the saving of human life, and parts of all the foregoing	
(2)	Combustible gas indicators, for detecting explosive gases or vapors; methane detectors; carbon monoxide detectors and continuous indicators and recorders; carbon monoxide alarms; pyrotannic detectors for determining the presence and quantity of carbon monoxide in the blood; inhalators for use in reviving victims of carbon monoxide poisoning; pocket gas respirators, dust respirators, paint and lacquer spray respirators, fume and smoke masks, and hose mask outfits complete with face piece, harness, air line and air pump or blower, designated for the protection of firemen and industrial workers; special safety goggles, designed for eye protection of miners, welders, foundrymen and other industrial workers employed in hazardous work; parts of all the foregoing	
35 p.c.	10 p.c.	25 p.c.5 p.c.	Free (various)	5 p.c. (various)10 p.c.	Free (various)	Free (various)Free	Free (various)	Free various)Free	Free (various)	Free (various)
35 p.c.
5 p.c. (various)
10 p.c. (various)
Free
(various)
>
Free
(various)
to
The Budget-Customs Tariff

Tariff
Item
British
Preferential
Tariff
410j
Miners' acetylene lamps and parts thereof; miners' safety lamps and parts thereof; accessories for cleaning, filling, charging, opening and testing miners' lamps; battery renewal preparations for miners' electric safety lamps; all for use exclusively in mines.!.,	
Free
Coal crushers, ore crushers, rock crushers, stamp mills, grinding mills, rock drills, percussion coal cutters, coal augers, rotary coal drills, n.o.p., and parts of all the foregoing, for use exclusively in mining, metallurgical or quarrying operations	
p.c.
410o
(i) Coal heading machines; electric or magnetic machines for concentrating or separating iron ores; automatic scales for use with conveyors; and parts of all the foregoing, for use exclusively in mining or metallurgical operations	
Free
410p
Sundry articles of metal as follows, for use exclusively in mining and metallurgical operations, viz.: furnaces for the smelting of ores; converting apparatus for metallurgical processes in metals; machinery for the extraction of precious metals by the chlorination or cyanide processes, not to include pumps, vacuum pumps or compressors; blast furnace blowing engines for the production of pig iron; and parts of all the foregoing	
Free
410q
Pumps and vacuum pumps, and parts thereof, for use exclusively in the extraction of precious metals by the chlorination or cyanide processes	
15 p.c.
410r
Power driven reciprocating pumps and parts thereof, designed for normal working heads of 400 feet and over, for use exclusively underground in mines	
15 p.c.
Mostr Favoured- Nation Tariff		Rates in Effect Prior to Rates Proposed in this Budget		
General Tariff	British Preferential Tariff	Most-Favoured-Nation Tariff	General TariffFree	Free	Free (various)	Free (various)	Free (various)15 p.c.	25 p.c.	5 p.c. 10 p.c. (various)	15 p.c. 25 p.c. (various)	25 p.c. 35 p.c. (various)Free	Free	Free (various)	Free (various)	Free (various)Free	Free	Free (various)	Free (various)	Free (variou15 p.c.	20 p.c.	15 p.c. (various)	15 p.c. (various)	20 p.c. (various)25 p.c.	27J p.c.	15 p.c. (varioiis)	25 p.c. (various)	27J p.c. (various)
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The Budget-Customs Tariff
410s
410t
410u
Amalgam safes; automatic ore samplers; automatic feeders; retorts; mercury pumps; non-metallie heating elements; pyrometers; bullion furnaces; amalgam cleaners; and parts of all the foregoing, for use exclusively in mining or metallurgical operations...
Blowers of iron or steel, of a class or kind not made in Canada, for use in the smelting of ores, or in reduction, separation or refining of metals, ores or minerals; rotary kilns, revolving roasters and furnaces of metal, of a class or kind not made in Canada, designed for roasting ore, mineral, rock or clay; furnace slag trucks and slag pots, of a class or kind not made in Canada; and parts of all the foregoing	
Blowers of iron or steel, n.o.p., for use in the smelting of ores, or in reduction, separation or refining of metals, ores or minerals; rotary kilns, revolving roasters and furnaces of metal, n.o.p., for use in the roasting of ore, mineral, rock or clay; furnace slag trucks and slag pots, n.o.p.; and parts of all the foregoing	
Free
Free
12$ p.c.
410v
Buddies, vanners, slime or concentrating tables and parts thereof, for use in mining and metallurgical operations	
Free
Free
Free
174 p c.
Free
410w
Machinery, n.o.p., for the concentration or separation of ores, metals or minerals, viz.: flotation machines, flotation cells, oil feeders and reagent feeders for flotation machines and flotation cells, pumps, vibrating and impact screens, jigs, magnetic separators, magnetic pulleys and filters, for use in the concentration or separation of ores, metals or minerals, and parts of all the foregoing	
5 p.c.
410x
Machinery, furnaces and appliances, of a class or kind not made in Canada, and parts thereof, for use in the refining of metals, and for the production of anodes, cathodes, blocks, slabs, pigs or ingots, in such refining processes	
Free
410z
Machinery and apparatus, n.o.p., and parts thereof, for the recovery of solid or liquid particles from flue or other waste gases at metallurgical or industrial plants, not to include motive power, tanks for gas, tor pipes and valves 10J inches or less in diameter..
5 p.c.
7i p.c.
Free
10 p.c.
		[DOT]	
Free	Free (various)	Free (various)	Free (various)Free	Free (various)	Free (various)	Free (various)20 p.c.	12} p.c. (various)	17} p.c. (various)	20 p.c. (various)Free	Free (various)	Free (various)	Free (various)20 p.c.	5 p.c. (various)	7} p.c. (various)	20 p.c. (various)Free	Free (various)	Free (various)	Free (various)12} p.c.	5 p.c. (various)	10 p.c. (various)	12} p.c. (various)
The Budget-Customs Tariff

Tariff
Item
440k
523g
-	British Preferential Tariff
(a) Locomotives and motor cars for railways, of a class or kind not made in Canada, and parts thereof (including motive power and parts thereof, of a class or kind not made in Canada), for use exclusively in mining, metallurgical or sawmill	
(b) Diesel switching locomotives, including motive power, and parts of the foregoing, of a class or kind not made in Canada		Free
(1) Engines and complete parts thereof, n.o.p., to be used exclusively in the propulsion of boats or in hoisting nets and lines used in such boats bona fide owned by individual fishermen for their own use in the fisheries, under such regulations as the Minister may prescribe		Free
(2) Diesel engines and complete parts thereof, to be used exclusively in the propulsion of boats or in hoisting nets and lines used in such boats for use exclusively in bona fide commercial fishing operations, under such regulations as the Minister may	Free
Stereotypes, electrotypes, rubber plates and celluloids for books, and bases and matrices and copper shells for such printing plates; positive and negative films of periodical publications regularly issued at stated intervals as frequently as, at least, four times a year, not including catalogues		Free
Woven fabrics, whether coated or not coated with rubber, when imported by manufacturers of card clothing for textile machinery, for use in the manufacture of such card clothing in their own factories.	Free
and,per pound	
	Rates in Effect Prior to Rates Proposed in this Budget		
General Tariff	British Preferential Tariff	Most-Favoured-Nation Tariff	General Tariff20 p.c.	Free	Free	20 p.c.15 p.c.	20 p.c.	30 p.c.Free	20 p.c.	30 p.c.15 p.c	22$ p.c.	37$ p.c.20 p.c.	Free	10 p.c.	20 p.c.Free	20 p.c.	30 p.c.15 p.c.	22£ p.c.	37$ p.c.15 p.c.	Free	12| p.c.	15 p.c.15 p.c.	Free	12£ p.c.	15 p.c.Free	Free	FreeFree	20 p.c.	30 p.c.Free	Free	Free	Free15 p.c.	20 p.c.	27§ p.c.Free	Free	Free	Free25 p.c.	25 p.c.	35 p.c. 4 cts.
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The Budget-Customs Tariff
80709-116J
(1) Fish hooks, for deep-sea or lake fishing, not smaller in size than number 2 0; fishing nets and nettings of all kinds; threads, twines, marlines, fishing lines, rope and cordage, not exceeding one and one-half inches in circumference, to be used for fishing purposes or for the construction or repair of fishing nets; the foregoing not to include such articles used for sportsmen's purposes, and to be subject to such regulations as the Minister may
prescribe	
but not less than, per pound
Free
Free
(2) Materials for use in the manufacture of the
goods specified in tariff item 682(1)	
but not less than, per pound
Free
Free
Settlers' effects, viz.:-Wearing apparel, books, usual and reasonable household furniture and other household effects; instruments and tools of trade, occupation or employment, guns, musical instruments, domestic sewing machines, typewriters, bicycles, carts, wagons and other highway vehicles, agricultural implements and livestock for the farm, not to include live stock or articles for sale, or for use as a contractor's outfit, nor vehicles nor implements moved by mechanical power, nor machinery for use in any mnaufacturing establishment; all the foregoing if actually owned abroad by the settler for at least six months before his removal to Canada, and subject to regulations prescribed by the Minister	
Provided:
(1)	That, subject to the exceptions stated hereunder, any dutiable article entered as settlers' effects may not be so entered unless brought by the settler on his first arrival, and shall not be sold or otherwise disposed of without payment of duty until after twelve months' actual use in Canada;
(2)	That the six months' ownership requirement as specified in this Item shall not apply in the case of bona fide brides' trousseaux and wedding presents; and
Free
Free
Free	Free	Free
	20 p.c.	25 p.c.
		24 cts.
	17$ p.c.	22$ p.c.
	(various	(various)
	12$ p.c.	17$ p.c.
Free	20 p.c.	25 p.c.
		24 cts.
	(various)	(various)
Free	Free	Free
	(The third	proviso to this Item
Free 35 p.c.
28 cts.
35 p.c. (various)
25 p.c.
35 p.c.
28 cts. (various)
Free
>
The Budget-Customs Tariff

British Preferential Tariff	Most- Favoured- Nation Tariff	Rates in Effect Prior to Rates Proposed in this Budget	Tariff Item	General Tariff	British Preferential Tariff	Most-Favoured-Nation Tariff	General Tariff Tariff(3) That with respect to bona fide settlers' effects imported from countries named by the Minister that are applying restrictions on the transfer of emigrants' capital to Canada, the six months' ownership requirement specified in this Item shall not apply and notwithstanding the first arrival requirements specified in this Item a reasonable amount of the effects of a settler may be entered from such countries during a period of three years from the date of the settler's first arrival, subject to such regulations as the Minister may prescribe.	708	Arms, military stores, munitions of war and other goods the property of and to remain the property of a British Commonwealth country designated by the Governor in Council or of a foreign country that is a party to the North Atlantic Treaty and is designated by the Governor in Council; goods consigned to military service agencies and institutions designated by the Governor in Council where the goods are for the personal use of or consumption by nationals of countries designated under this Item who are employed in defence	Free	Free	Free	Free	Free	FreeProvided that the Governor in Council may prescribe regulations for all the foregoing and may order that any of the privileges granted under this Item be withdrawn in any case where a country does not grant corresponding privileges to Canada.	(various)	(various)	(various)
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The Budget-Customs Tariff

The Budget-Mr. J. M. Macdonnell
2. Resolved, That schedule B to the Customs Tariff, being chapter forty-four of the Revised Statutes of Canada, 1927, as amended, be further amended by striking thereout tariff item 1052, the enumeration of goods and the rate of drawback of customs duties set opposite to the said item, and by inserting the following items, enumerations and rates of drawback of customs duties in said schedule B:
Item No.	Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as Drawback1052	Machinery, new or used, and all parts thereof, not including consumable tools, of a class or kind not made in Canada.	When for use in the plants of manufacturers of automobiles and motor vehicles or of automobile or motor vehicle parts for the manufacture of automobiles and motor vehicles or of automobile and motor vehicle parts	99 p.c.1053	Machinery, new or used, and all parts thereof, not including consumable tools, of a class or kind not made in Canada.	When for use in the plants of manufacturers of aircraft, aircraft engines, aircraft equipment, or of parts of the foregoing lor the manufacture of aircraft, aircraft engines, aircraft equipment, or of parts of the foregoing	99 p.c.
3. Resolved, That any enactment founded upon the foregoing resolutions to amend schedules A and B to the Customs Tariff shall be deemed to have come into force on the eleventh day of April, one thousand nine hundred and fifty-one, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(See also Budget Papers, pages 1837 to 1910.)
James MacKerras Macdonnell: Mr. Speaker, the minister must be pleased and perhaps a trifle surprised to And how popular his new taxes are; and perhaps it is just as well that he did not get the applause before he made his speech or he might have made them even higher. Whatever our differences with the minister are, I am sure I can say that we all recognize the heavy burden which he carries and that we appreciate the manner in which he discharges his heavy duties.
I do not propose tonight to enter into the details of the taxes which the minister has propounded. These can be gone into as we continue this debate. There are not many surprises, after all. The known taxes are there, and there are not many places for him to go when he wants substantial amounts of money.
As a matter of fact, Mr. Speaker, when the minister was speaking of millions and tens of millions of dollars, I was thinking most of the time of the people to whom millions and tens of millions are rather meaningless and whose financial calculations are limited to figuring whether or not they are going to be able to get by this week with prices as they stand now. We know how many of these people there are among us; and not all the glowing figures we have, showing the wonderful progress that we have made, alter the fact
that we have among us tens of thousands of people to whom these figures mean nothing. Indeed, it is a bitter irony that we are not able to manage our affairs well enough so that these people can be relieved of the necessitous situation in which they find themselves.
Having said this, I would say to the minister that it is a great disappointment to find that there is no indication tonight-none so far as I can see-that the minister is prepared to consider further measures to deal with this situation. Notwithstanding the fact that apparently we are the only civilized country, if we can call it that, which is not trying to deal with this matter, he goes cm persisting in a blank negation. I confess that after what the minister told us the other day I had hoped-although he did not, I must admit, put it in so many words-that we should have something different from this1 blank negation.
But I must admit the minister was surprisingly optimistic. He found a satisfaction which I am not able to share in various aspects of what he had to bring forward. He compared us with other countries and admonished us that we should be extremely thankful to be as well off as we are. My answer to that is this. What other country has the natural advantages that we have? What
1826	HOUSE OF
The Budget-Mr. J. M. Macdonnell other country has it in its power to manage its affairs so that these hardships-which undoubtedly exist here-need not exist and should be done away with.
Then the minister went on to tell us as to what the government had done. First of all, they balanced the budget. I appreciate the balancing of the budget; but of course when the minister takes nearly $4 billion of our money, it is quite easy to balance the budget. I suppose if he had taken $500 million more, we would have had a $500 million larger surplus. When the minister takes satisfaction out of the great buoyancy of revenue, I must say that to me there is a certain amount of irony in that. I do not think he gave us the figures to show how much of that buoyancy was caused wholly by high prices. I think he mentioned high prices-


Douglas Charles Abbott: About half.


James MacKerras Macdonnell: It would be a very substantial amount indeed, and there is precious little happiness to be got out of that realization. The minister told us about the economies, and all I wish to do on that score is to read a short extract from the Winnipeg Free Press which, I understand, is not usually regarded as particularly hostile to the government.


Mr. Ross (Souris):: Just certain sections of it.


James MacKerras Macdonnell: What the Winnipeg Free Press of March 16 last said is this:
The federal government's estimate of expenditure in the next fiscal year shows clearly that economy as a weapon against inflation has failed. The government has sharply reduced its expenditures in various departments, but these savings are almost entirely counterbalanced by increases elsewhere.
Then they mention the $35 million and say that in a non-defence budget of $1,922 million that is not big enough to be any good.
Then the minister mentioned consumer credit, and I will deal with that subject briefly. We passed legislation here last September. Having tried our best to create the impression in the minds of the government that there was a real emergency, we passed legislation with regard to consumer credit. The minister tells us, and correctly, that certain restrictive measures were put into effect in November and that more restrictive measures were put into effect in March of this year. But those put into effect last November were just a token. You might as well have waved a wand, for all the effect they had. I will say that those in March were better. But up to the present-and I wish to make this point, Mr. Speaker-none of these measures has had really any substantial effect at all.


Then we come to what the minister calls exercising influence on credit. Actually, I would remind the minister that the Bank of Canada was established for the purpose of regulating credit and currency, and I do not think anyone who knows the relationship between the Bank of Canada and the chartered banks doubts for one moment that when the Bank of Canada speaks the chartered banks listen.
Now, what is the situation with regard to our monetary policy? In a word, Mr. Speaker, I would remind you that for years, and in spite of all that could be said from this side of the house, we have had what is called an easy money policy. It was devised in 1945 when depression was expected, and it was used all through the successive years in spite of the fact that we were in a boom. The Winnipeg Free Press, if I may quote that friendly organ again, calls it the big blunder. Last September we urged-and the minister seemed to indicate he was going to take it seriously-that there should be a real attempt to curb credit. What was the result? What happened after that? During the autumn months, from September to November, there were $400 million of new bank loans. Approximately we created $400 million in addition to what there had been before. In other words, Mr. Speaker, this new money comes into competition with the wages, salaries and other earnings of the people of Canada and helps to sky-high the prices.


Mr. Speaker:: Order.


Gordon Graydon: Get those high cost of living people out of the back.


James MacKerras Macdonnell: I want to
ask this question, Mr. Speaker. What hope have we had held out tonight? My answer is that so far as dealing with these high prices is concerned we have had nothing but a blank negation. I repeat what I said a moment ago. Apparently we are alone in this. All other nations are prepared to act, and we are not prepared to act. We have to wait and see. We have to hope that something will turn up.
Let me make clear, Mr. Speaker, that I am not asking for rabbits out of a hat, I am not asking for a rigid system of over-all controls. What I am asking for is something flexible, something sensible. I want to say that the most responsible and reputable authorities do agree that in these emergent days emergent measures may be taken. I refer to such well known organs as the London Economist and to a well known American economist called Slichter, and to a very responsible and conservative organ

produced each month by the National City Bank. All of these speak of measures which may be taken temporarily and in an emergency, such as most of us in this house, most of us at any rate in this party, believe in, and I think if they could vote freely most of the people in this house have the same feeling.
In conclusion I wish, so far as my voice can carry, to let the people of Canada know that this emergency has been created in substantial measure by government neglects and defaults. I repudiate entirely the idea that this has just happened, that it is just a phenomenon, to use the word that the Minister of Finance (Mr. Abbott) used the other day, a sort of act of God; that we have nothing to do with it. I repudiate that entirely. But I go on to say that in spite of these mistakes and neglects the government have the temerity to return a virtual negative to everything that we can ask.
The government is always telling us of their great majority, but I would venture to ask them: In the light of what is happening now, how long do they think they can turn their backs on the people and still say that they have the people at their backs?
On motion of Mr. Macdonnell (Greenwood) the debate was adjourned.



COST OF LIVING


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The house resumed consideration of the motion of Mr. Fournier (Hull) that Mr. Speaker do now leave the chair for the house to resolve itself into committee of supply, and the amendment thereto of Mr. Drew.
John Horace Dickey: I have no desire to detain the house very long this evening after the very masterly budget that we have heard presented by the Minister of Finance. However, I do want to deal very briefly with two or three points which have arisen, or which have presented themselves to my mind during this debate on the amendment of the leader of the opposition.
The question that is raised by this amendment, Mr. Speaker, is a very difficult one to deal with briefly, and I will not presume even to attempt to deal with it, but I have one or two observations that I feel should be made.
I think this debate exemplifies something that the Minister of Finance said in delivering his budget, namely, that there are no great divisions of fundamental policy in Canada on questions of this kind. I think it is clear that we are all agreed on the
Cost of Living
seriousness of the threat of inflation, and the necessity of having taken effective action to meet it.
The differences between us, Mr. Speaker, are purely on the details of how this problem should be met and what action should be taken to meet the rising cost of living, which is one of the symptoms of inflation. It has been said by a number of speakers that the people of Canada are disturbed by the effect upon their living of the rising cost of almost everything that Canadians have to buy. I think it is true. I know it is true that the Canadian people are disturbed about this and other effects of inflation.
While I was home during the Easter recess I discussed this problem with a number of people. In one particular instance, representatives of the railway brotherhood waited upon me to express to me the views of their membership. They expressed to me their belief that the government should institute price and rental control, and they asked me to place their views on this question before parliament, which I am doing this evening. I found myself unable to agree with the opinion expressed by that delegation, and I tried as best I could to explain to them the reason for which I held somewhat different views, and the reasons why I had a different idea of the proper approach to this problem.
Many of these reasons have been dealt with in the speeches of members who have preceded me in this debate. I do not propose to go over the ground that has already been thoroughly covered. I should like to state briefly some of the reasons why I believe that the decisions taken so far by the government on these questions have been a correct policy for this country to follow.
First, in my view price or rental controls are only one part of the attack on inflation, and they are a part of that attack which cannot stand alone. Our friends in the C.C.F. used to tell us a great deal about the controls and the wonderful experiences they were having in England with the maintenance of controls. We do not hear so much about the English experience these days. This afternoon the hon. member for Vancouver East (Mr. Maclnnis) questioned a statement made by the Minister of Trade and Commerce (Mr. Howe) that at the present time the inflationary trends in Great Britain were stronger than they were in Canada. Perhaps a year or so ago the hon. member would have questioned that statement most violently, but today he contented himself with questioning its absolute accuracy and tried to leave the impression that the Minister of Trade and

Cost of Living
Commerce had1 somewhat exaggerated the inflation being experienced in England.
However that may be, I think the English experience not only proves that price control alone will not contain inflation but it proves that a rigid over-all system of controls on prices, on rents, on wages, on manpower and the whole panoply of direct controls cannot indefinitely answer this problem. While under this system the English people for the past few years have been protected to some extent from paying the price of inflation through a rising cost of living, all that time they have been paying that price through the creeping paralysis of austerity and now a situation has developed where even these controls will not keep the cost of living down and in addition they are going to have to pay the price in a rising cost of living.


William Joseph Browne: May I ask
the hon. member the same question he asked the hon. member for Vancouver East? The Minister of Trade and Commerce said that the cost of retail prices had gone up 15 per cent in Canada and about 21 or 23 per cent in the United Kingdom, but that the cost of living index had not gone up very much in the United Kingdom.


John Lambert Gibson: It costs more to live over there than it does here.


William Joseph Browne: You do not
know what you are talking about.


John Lambert Gibson: Certainly I do.


John Horace Dickey: The hon. member for St. John's West (Mr. Browne) has a strange idea of what is a question, but that is exactly the point I raised with the hon. member for Vancouver East. The point is that if the over-all index of retail prices as opposed to the cost of living has gone up 23 per cent in Great Britain it is simply because the rises so far have been in items that are not heavily weighted in the cost of living index. When these rises in prices become effective in items that are heavily weighted in the cost of living index then the inflationary pressures which are at work will become apparent in the index. The only thing that differentiates the British situation from ours is the fact that these effects have not become apparent in the cost of living index, but they will.
The headline in the Ottawa Journal today reads:
Britons get "Black Budget"
Hardly a person escapes tougher austerity orders.
That indicates the situation which the British public unfortunately faces at the present time. They have been paying the 
price of inflation in austerity and are now beginning to pay it as well in a rising cost of living.
The second point I should like to outline briefly is the obvious inability of Canada or any other country to deal with extraordinary advances in the cost of basic imports coming from other countries. This is an element in the cost of living which we cannot possibly control with price or any other control within the country.
Third, I do not believe that the Canadian people should be called upon to accept or are ready to accept over-all controls that would be required if we are to embark immediately upon a system of price and other controls. With price control we would have to foresee the inevitability, either immediately or within a short time, of wage and salary controls. With wage and salary controls being applied we would have to foresee almost immediately some form of selective service. When we get to that stage, or perhaps even before, we would have to foresee some form of widespread allocation of materials and the imposition of severe export controls as well. In the background of the whole picture is the question of substantial subsidies, either at the manufacturing or at the consumer level.
I think that anyone in this house who advocates the imposition of price or any other control of a general nature must be prepared to take the responsibility of stating that he believes that we should consider an economic procedure of taking gradually, or perhaps in a short space of time, all these controls into the Canadian economy. I was struck by one paragraph in the speech of the leader of the opposition (Mr. Drew), who moved this amendment the other day. At page 1736 of Hansard of April 9 he is reported as saying:
The government has contended that no nation in the world did a better job of price and other controls than Canada did during the last war.
I do not think the hon. gentleman will find anyone who will dispute the truth of that statement. He then went on to say:
In that effort they were assisted by very able economists. The experience of those men and women is available today. The government can take advantage of that experience and with the knowledge they possess, knowledge we do not possess as to what controls they are going to impose on production and supply, they can design price and other controls appropriate to meet the situation which will result from their action at the production and supply level.
I presume that those are the same gentlemen who were characterized a year or eighteen months ago as being Marxists and dangerous to the Canadian nation. The fact is, as was pointed out last evening by the

Minister of Trade and Commerce, the government is doing exactly what the leader of the opposition urged them to do in the paragraph I have quoted. The experience is that all these gentlemen who are referred to as having assisted and advised the government in the operation of the control procedures of the last war are advising the government unanimously that in the present circumstances such controls simply will not work. On that basis I submit, Mr. Speaker, that the government is taking very good advice from these gentlemen, and is doing exactly what the leader of the opposition (Mr. Drew) has suggested that they should do.
I should simply like to say that I regard the amendment as an invitation to the house to register a false decision that we do not have confidence in the present government, and the basis for that false decision would be that our lack of confidence arises out of the government's refusal to embark on the kind of direct controls being advocated by the hon. gentleman opposite. My opinion is that the government is being well advised, is being wise, and, because of the anti-inflationary policies which it is following and will continue to follow, far from deserving a vote from us expressing lack of confidence it deserves our faith, wholehearted confidence and support.


Mr. G. A. Cruickshank (Fraser Valley):: Mr. Speaker, in the last paragraph of his speech the last speaker actually said all that I intended to say tonight. I really wanted to explain why I could not possibly vote for the amendment. In the first place it is a motion of lack of confidence. Is there anyone else in this house in whom anybody could hope to have confidence to replace the government now in authority? Naturally I have to vote against the amendment. Personally I think that controls are inevitable sooner or later but I do not want controls that, when put into effect, will start at the level of the farmers as they did last time. I think the finest education for anyone who is going to institute controls, or who is going to have anything to do with their operation, would be to spend a month on a dairy farm as an active worker, not merely as an onlooker like so many of those in high places who tell us that they were brought up on a dairy farm and took good care to get out when they were young.
A neighbour of mine with a very important position has a nineteen year old son who worked in the lumber business for six months and then was promoted. He gets $15 a day. Of course I am speaking of the province of British Columbia where we pay proper wages, not some of the more backward 50709-117
Cost of Living
provinces. This boy receives $15 a day for an eight hour day. His father, who holds a very responsible position corresponding almost to that of a deputy minister at Ottawa, gets $250 a month, and no travelling expenses. His uncle across the road, with a $25,000 investment, milks cows 365 days a year and makes $12 a day. That is one reason why I do not think we are ready for controls yet. I am too much afraid that they will be put on at the farmers level.
There can be no question that the cost of living has gone up. We had an example of it tonight. I was more fortunate than some, as you can see. I borrowed $10 from the hon. member for Fort William (Mr. Mclvor) and bought every cigarette I could possibly lay my hands on, after the new tax was announced. I had no compunction in doing that. I am not a hoarder but I did that tonight. I want to express the opinion that I think it is utter-I cannot use the language I should like to, and I am not ashamed to say that I have used a little of it in my time-nonsense not to tax alcohol and to tax cigarettes. I do not think that meets with the approval of even ten per cent of the people of Canada. I will have more to say about that at the right time and will make many forty-minute speeches when the resolutions are before the house. That is one thing that I should like to impress on the government to the best of my ability.
As I said, I will certainly vote against the amendment because it is a straight vote of confidence in the government, and I have every confidence that the government will work out a solution. I think they are a bit backward so far as the people I particularly want to deal with tonight are concerned, the burnt-out veterans and those on soldiers pensions. I do not know just how it is possible to expedite the matter but I would suggest a bonus. It has been pointed out to me that we are providing a 20 per cent pay increase for judges. I listened the other night to a discussion about a subsidy to take useless gold out of the ground. I have not heard anything about a subsidy for the man who is milking cows 365 days of the year. I have a local paper here that concerns the people of my community, and there is a headline reading, "Low Bond Quote Jeopardizes District School Building Plans." The school bonds had to be sold at 92-75, and it is one of the wealthiest municipalities in the province of British Columbia. The municipality of Burnaby-I venture this statement-is one of the largest in population and assessment in the Dominion of Canada, and they could not get an offer on their school bonds at all. That is a pretty serious state of affairs.

Cost of Living
I want to emphasize that if controls are instituted-and personally I think that eventually they will be in some form or other-they must not be put into effect at the producers level. We hear all sorts of talk about milk when it goes up a cent. I did not hear anybody in the house, and very few outside, complain when beer went up four cents, or whatever it did go up, but as soon as milk goes up we hear about it. I have heard members of the house with incomes of over $25,000 a year complaining about the price of butter, but they would not know which end or which side of a cow to start milking, let alone do it for 365 days in a year.


An hon. Member:: Which side is it?


George Alexander Cruickshank: I can tell you because
I am a practical farmer and not a graduate of a university of agriculture. That will hold you.


An hon. Member:: Not for long.


George Alexander Cruickshank: We have set up a
veterans affairs committee, and I understand that I am a member of it. I hope that the first thing they will take up will be the question of finding some means or other of urging upon the government the plight of these veterans. I know that every member of the government and of the house, including the leader of the opposition (Mr. Drew), is just as sympathetic to the veterans as I am. I think every member wants to see that no one suffers but anyone who has travelled around Canada at ail-I was going to use the words "lower level" but that is not correct-and visited the ordinary rank and file in the dominion knows that there is suffering at the present time. He must know and appreciate that there is tremendous suffering amongst those on fixed incomes, particularly those on old age pensions, veterans pensions or any other kind of pension.
Naturally I am particularly interested in veterans pensions because I am closely associated with the veterans. There are veterans widows suffering from arthritis who are receiving the magnificent sum of $40 a month on which they are expected to live. As I see it, that is not good enough. I do not care what steps the government takes to bring justice to these people. That is a matter for some of the experts and economic authorities who abound in Ottawa. The only things we have more of in Ottawa than economic authorities are the lobbyists at the Chateau Laurier. I hope the government will take steps very soon so far as those on pensions and other fixed incomes are concerned. I should like to urge upon the
	-
government strongly that, if and when controls are instituted, they should not be based on the producer level entirely as they were the last time, remembering at all times that the farmer is not only a producer but a consumer as well.


William Joseph Browne: Mr. Speaker, coming from a part of the country which feels the effects of rising prices more than any other, where we rely on imports for such a large proportion of our food and clothing, I feel that I must take part in this debate and support the amendment which has been proposed by the leader of the opposition (Mr. Drew). I believe that amendment is supported also by the great majority of the people of this country today.
What we have heard from the members and supporters of the government are technical objections rather than arguments in principle against the imposition of controls to prevent prices rising. I do not believe any question is agitating the minds of the people of this country at the present time so much as the rise in the cost of living. Other hon. members have referred to various groups who are affected. Let us begin with the civil servants, the people working for the government, the very people upon whom they depend to carry out this magnificent program we have heard about. What do they think about the cost of living? Here is an article which appeared in the Ottawa Journal of April 5 under the heading, "Civil service asks further raise or living cost bonus. Swiftly rising tide of prices alarms government staff". It says:
Mr. Whitehouse stressed that the main reason for the soaring of the index was due to marked increases in the price of food. The public service had recently received a salary revision but the increases are still 10 per cent behind living costs. The increases covered costs as of last September, he said. There are indications they are not going to stop unless controls are clamped on immediately.
That is the view of the people working for the government, a large class of people in this country. I do not knew whom the hon. member for Halifax (Mr. Dickey) was referring to when he said the government was depending upon the experts who carried out the price control policy during the last war. That must be a very select few at the top, not the great majority of civil servants.
Then take the next class of people who have been referred to, the civil service pensioners. How do they feel about the effect of rising costs of living? Only the other day the Minister of Finance (Mr. Abbott) told the hon. member for Winnipeg North Centre (Mr. Knowles) that he was tired answering this point. He did not bother going into details at the time, but he told me afterwards that the civil servant buys his pension, and if he

does not buy enough pension that is his own lookout and nothing can be done for him. When the cost of living goes up 15 or 16 points in a year the civil service pensioner who gets $50 or $100 a month finds that the value of his pension has decreased appreciably, and he and his wife are under stress and anxiety while the government appears to be cynical about it.
Take another group of persons, the old age pensioners, who prior to the election of 1949 were promised $40 a month. How much has the cost of living gone up since 1949, and how much is that $40 worth today? The cost of food, which is a major item, was estimated at 203 in 1949. It is now estimated at 220, an increase of 17 points. The cost of living in 1949 was 160. Now it is almost 180, an increase of 20 points. In other words money has depreciated by 14 per cent in that time. A great many persons who have become entitled to pensions within the last five or ten years are terribly affected by the rise in the cost of living since 1945, when we began to remove the controls. There are also the veterans and people living on fixed incomes, such as widows and orphans, and people who get their income from government bonds. All these people are affected; so are the workers and the farmers. Only today we had a delegation here interviewing the government asking that price controls be put on. I think I can speak for the fishermen who had to take at least 50 per cent less for their catch last fall. How can anyone expect them to make a living with rising costs? It would also be interesting to point out that the value of the indemnity paid members of parliament has declined by about 12 per cent. We would need $4,750 to equal what the member of parliament received two years ago. But the judges are being given special consideration.


Alphonse Fournier: Are you in favour of an increase in the indemnity?


William Joseph Browne: I am sure the minister has much more influence than I have and he should see that justice is done. I see it is going to be done to the judges. There is a resolution on the order paper in the name of the Minister of Justice to increase the salaries of judges, to increase the number of judges and to provide certain adjustments as to the pensions of judges and widows of judges. I wonder if that is to make allowance for the increase in the cost of living. If it is, we shall hear more about it when that matter is debated, because they are not the only people affected, and they are better able to bear it than the classes I have referred to.
This attitude on the part of the government reminds me of the attitude of the commission 80709-1174
Cost of Living
government in Newfoundland during the war. As president of the civil service association I had occasion to head many a delegation to interview that government asking for either price controls or a cost of living bonus for the civil service. On each occasion we were told, "Oh, it is impossible for us to put on controls. We have to import so much of our goods; we depend on outside sources, and we cannot do anything about it." But what happened? After the cost of living had gone up about 60 points they put on controls, and then they started talking about a cost of living bonus. It seems to me that is what this government is doing now. It is ashamed to admit that it is last in the field, that the opposition has brought up this matter which is so vital to the great majority of the people of this country. The government do not want to admit they have been wrong.
I can appreciate that there are certain difficulties about introducing controls, and that the government is reluctant to set up elaborate machinery such as we had during the last war. Despite the success of the control policy and the reputation the Canadian government gained through its operation from 1941 to 1945, last evening the Minister of Trade and Commerce (Mr. Howe) said he had not met anyone who had administrative experience in controls during the last war who was in favour of putting on the same type of controls again. Everyone who speaks of this talks about the same type of controls, and no one explains what he means by it. We have to control prices; the people who have had experience with rising prices are very anxious to see them stop soaring, and we have all met people like that. The government is well aware of the inflation that exists at the present time. During the past day or so the Prime Minister (Mr. St. Laurent) wrote a letter to the Ottawa branch of the Canadian consumers' association, which appeared in the Citizen of this morning. In it he said:
As you are aware, the government has attempted to mitigate inflationary pressures by attacking the problem at its roots.
Today we heard a very interesting lecture by one Hans Selye, a Czech doctor, who told us there were two kinds of treatment practised by doctors. One was the causative treatment, getting at the roots and eradicating the disease, like cutting out a cancer. The other one was the symptomatic treatment to relieve the symptoms. The symptom we want relieved at the present time is the increase in prices. The government does not have to solve all the economic problems, but can stop the rise in the price of necessities which the people of this country are

Cost of Living
facing today. The public is clamouring for these controls. What if the public is right and the government is wrong? What if the opposition is right and the government is wrong?
There are certain people, sir, who are protected by the fact that in making agreements they have taken the precaution of having an escalator clause inserted, which is attached to the cost of living index. From the Ottawa Journal I have an item which states that the people working for the municipality of Ottawa will get a monthly cost of living bonus of about $10,000, because in the agreement they made with the city of Ottawa there was a provision that when the cost of living went up they were to be recompensed. The 1,400 employees will be paid, but the Ottawa firemen who recently signed a similar cost of living bonus agreement will not benefit from the most recent jump in the index. The firemen's bonus does not become effective until the April cost of living figure. The Ottawa municipal service association members will be paid 35 cents per head per week for every point increase in the index since June, 1950. That amounts to about 13 points, and multiplied by 35 cents it equals $4.50 per week for each one of those 1,400 employees. The article reads:
Finance commissioner Gordon told city council at the last meeting the city would have to pay bonuses amounting to $260,000 on point increases to the end of January, 1951.
It can be seen from that there are certain people who will not be affected to the same extent as those who have no protection. The government seems to be indifferent to those who have no protection.
Tonight, sir, we heard the Minister of Finance (Mr. Abbott) deliver his budget. Anyone who heard him must be filled with admiration for this remarkable country that has such enormous wealth, and has such a capacity to meet tremendous expenditures of the kind indicated here this evening; a budget of nearly $4 billion expenditure can be met by the imposition of an extra billion dollars in taxes during the coming year. I think it is a marvellous feat for the Minister of Finance to attempt, but for him to say at the same time that this will not result in an increase in the cost of living is palpably absurd. Those people who are going to have increased corporation taxes are going to raise their profits. It has been stated here that the profits of companies during the past year have risen. Mr. Speaker, in my opinion they have risen out of all bounds.
Anyone who looks at the Financial Times report on companies operating in this country, a special edition of which was issued a short time ago, will see that the value of
[Mr. Browne (St. John's West) .1
stocks went up and profits went up. Some of the companies made very many millions in profits, and had hundreds of millions of dollars increase in the valuation of their shares during the past year. Is the government indifferent to the remarkable amount of money that these companies have made during the past year? From the statement of the Minister of Finance it seems that they are indifferent. Certainly, they are more friendly disposed towards corporations than they are towards that class of person who is dependent upon government action to help him achieve a decent standard of living. I cannot see anything in the budget that is going to reduce the cost of living. I cannot see anything in it except what will increase the cost of living. The minister mentioned a few things he was doing, but most of them are already in effect and they are not doing what he expected they would do. Last September he introduced measures that he thought were going to put down inflation. A month ago he introduced a measure to control credit. These measures have produced no results up to now, and I doubt very much whether they are going to show any results. I do not see anything that he has mentioned here tonight that is going to reduce the cost of living. The things in which the majority of the people in this country are interested are food, clothing and rent. I see nothing in the budget that is going to bring down the cost of those items.
The Minister of Trade and Commerce (Mr. Howe) recommended that we avoid panic buying. I cannot imagine that the old age pensioners or the veterans or the civil servants -I do not know what they are like in this part of the continent but I know that in Newfoundland most of them were in debt nearly all their lives because salaries could never catch up with the cost of living-are going to engage in panic buying. There may be certain classes of people who will do so. Anyone who analyses the income tax reports will see that it is a comparatively small proportion of the population who have incomes of over $5,000 a year, and that is the class to whom the minister was referring.
We know that one of the causes of the increased cost of living is the decline in farm production. People are leaving the farms and going to the factories. I do not know what the government can do to encourage people to work on farms, but there is no doubt that we need to have more food produced if we want to have a sounder economy. It seems to me that the government is altogether too complacent about this situation. They are talking in a technical language which is over the heads of the people. The people cannot

understand what they are talking about. The Minister of Public Works (Mr. Fournier), generally so genial, seems to be unperturbed about this situation.
There are two kinds of inflation. There is the open inflation that we are watching, and there is inflation that might take place if you have controls such as they now have in the United States. Mr. Donald Gordon, who was the head of the price control system during the war, says it is better to have control than inflation. I submit, Mr. Speaker, it is better. I cannot understand the hesitancy of the government, in the face of the critical conditions under which a large proportion of the people are living. Why are they so indifferent? I appeal to them not to be worried about losing face because they have to accept an amendment moved by the leader of the opposition (Mr. Drew). Let the government remember that the amendment is supported by the majority of the people of this country. If we had a secret ballot in this chamber tonight, I believe that the majority of the hon. members supporting the government would vote in favour of that amendment because they know that every class of person, farmer, fisherman and workers of all kinds, is in favour of controls to curb the rising cost of living.


Mr. O. L. Jones (Yale):: Cost of Living
who have been good citizens of Canada for from ten to thirty years; and only by their having served in the imperial forces during the war do they differ from any other Canadians. They have contributed as much as any other Canadian to build up this country in those ten to thirty years. If, as has been indicated1 so far, government action is not to take place beyond what has been suggested by the budget to curb the rising cost of living, which curbing would give these men a reasonable hope that the worst is over, that hope has been denied them tonight.
I suggest that, failing direct action of price control, the government should seriously consider making up to these men the difference between the pound and the dollar, by fixing a higher rate of exchange for the pound paid in the form of imperial pensions. I do not mean to have that procedure apply to every small pension that is paid but rather to those who are in receipt of, I would suggest, a pension of 60 per cent to 100 per cent or are totally disabled. Many of these people could qualify for the old age pension, but the government does not have to pay it because they are getting a British pension. They could quite easily qualify for the old age pension in Canada if they did not receive this pension. I therefore do not see that the government would lose a great deal by subsidizing them or making up the difference in exchange in order to give these people a self-supporting pension that would keep them off public relief or from applying for the old age pension.
The same pressing argument could be advanced for all pensioners in the lower bracket of pensions, such as the blind and the old age pensioners and that vast number of men and women who are classified as incurable, whose total income depends on the generosity of friends or relatives. I do not need to enlarge upon the pitiful plight of these people. Hon. members are all aware of it and of the conditions under which the old people live, and how they try to maintain even a semblance of a standard of living, naturally receiving a periodical shock that we all receive when the cost of living spirals up a few more points. Even before the bureau of statistics informs us of this spiralling increase, these old people are fully conscious of it. They have already been to their grocer or to their butcher and have found that prices have gone up and that they have had to pay that much more for their needs. It does not take an index to bring home to any individual, particularly those in the lower brackets, the fact that the cost of living has

gone up. If for no other reason than to protect the living standards of these people whom I have mentioned, I think the government should take immediate action to prevent any further rise in the cost of living and that it should lay plans for a roll-back of prices.
The hon. member for Hamilton West (Mrs. Fairclough) has on the order paper a resolution, and I hope it comes before the house, asking for an increase in the allowable income of old age pensioners. In case an opportunity is not given to bring it before the house I would certainly make that plea now on behalf of old age pensioners. If the cost of living is not to be curbed at the present level, at least grant to them an allowable income at an increased rate.
There is one other group to which I would like to refer, one in my own particular riding, namely the workers in the fruit industry. The main industry of our valley is fruit production, packing, shipping and so on. Naturally, by the very nature of the industry, we have a great number of parttime workers whose total income for the year is not high, although their income for one month, two months or three months while they are working may be quite decent. These people have given a great deal of thought to the spiralling cost of living. I should like to read part of a letter which I received from the Okanagan district trades and labour council early this year. It reads in part as follows:
Dear Sir:
The continuing upward spiral in the cost of living, which is the cause of considerable and growing apprehension among all Canadians, was the subject of close study at the last regular monthly meeting of the Okanagan district trades and labor council, held in Kelowna on Sunday, January 7 last.
As a result of the discussion, I was instructed to write to you, in your capacity as member of parliament for the Yale constituency, requesting your support in the next session of parliament for the enactment of price control legislation as outlined in the joint statement issued under recent date by the four major trade union centres, a copy of which I enclose for your information.
In order that there may be no mistake as to the attitude of the trade unions on this matter, and particularly the trade union that took the trouble to write to me, which is a very flourishing union operating largely in the Okanagan, I would like to read what they refer to as the views expressed by the four major unions of Canada. I am quoting from their brief in part:
The four trade union centres at the end of the war urged that price controls be maintained and at no time since have we retired from that position. We have always been unanimous in saying that the immediate result of the removal of controls would be the sky-rocketing of prices making it more difficult for average Canadian families to meet

their household requirements and maintain themselves in decency and dignity. We were repeatedly told by spokesmen for the government, however, that once price controls were removed prices would level off and automatically adjust themselves.
Our warnings went unheeded. The ill-timed removal of price controls led to an alarming increase in the price of all commodities, an increase which is still continuing. The effectiveness of control measures is well illustrated by the government's own figures. During the war under controls the cost of living index rose only 5.0 points between December, 1941, and April, 1946. Since April, 1946, when controls were removed, the cost of living index has shot up 50 points from 120.8 to 170.7 on November 1, 1950.
Statements to the effect that wage increases are the cause of higher prices are misleading. Since the removal of controls, prices have been free to rise at the will of the employer. Wages, on the other hand, can only be adjusted by negotiation, conciliation or even arbitration.
In connection with the wages of this particular group, they have an escalator clause, which works in a different way from the ordinary escalator clause. It is closely tied in with fruit prices. If the fruit prices go up the wages go up. If the fruit prices go down, the wages go down. In that way the worker in this industry has played his part in trying to keep prices down.
Finally, I would appeal particularly on behalf of the imperial veterans, that the government give serious consideration to the fact that these people are doubly penalized, first, by having to accept a drop of from $3.80 to $2.90 in the pound, and second, they have a converted dollar worth only 60 cents. If consideration is given to them it should be given immediately, and should be made effective at once.
Cost of Living


Mr. R. R. Knight (Saskatoon):: Mr. Speaker, I have only a minute or two at my disposal. It is hardly worth while my opening my main theme. I have been sitting here this evening listening to some of the remarks, and listening to the budget speech, and they made me think of a little nursery rhyme that I knew in my childhood. I remember that I had a book, I think it was called "Nonsense Rhymes." There was in it an ode addressed by humans to the world rolling in space, and it went something like this, although I will not take any responsibility for the correctness of my quotation. Yet I hardly think that any hon. member will mind very much if I am wrong in it. It went something like this: Roll on. thou ball, roll on!
What tho' I suffer numerous ills What tho' I swallow countless pills What tho' I cannot pay my bills?
Never you mind, ball, roll on.
When I think of that little nursery rhyme in relation to the demand for price control I think of this government as that ball which rolls on unheeding of the poor fellow who addressed it.
On motion of Mr. Knight the debate was adjourned.



BUSINESS OF THE HOUSE

Alphonse Fournier: Tomorrow we will continue with this debate, and always hoping that we will get into supply and call four departments. Then we will take up Bills No. 191 and No. 192.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]


The Budget-Appendix


[Stage Direction]
presented by Honourable D. C. Abbott, M.P., for the information of Parliament on the occasion of the Budget of 1951-52
[Stage Direction]

The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
(1)	to make available in one place and in convenient form, as a supplement to the Budget, some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics and other Government agencies, together with brief comments;
(2)	to present a preliminary review of the Government accounts for the fiscal year ending on March 31, 1951.
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The Budget-Appendix

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1.	The National Accounts
N ational Income, Product and Expenditure Personal Income and its Disposition Source and Disposition of Saving Investment
Public and Private Capital Expenditure Revenue and Expenditure of All Governments
2.	Employment and Wages
3.	Balance of International Payments
4.	Trend of Prices
The tables in this Budget Paper are based upon estimates provided' by the Dominion Bureau of Statistics and other Government Departments. Some of the figures appear for the first time; others have been published elsewhere. All 1950 estimates are preliminary and subject to revision.
Figures for Canada include Newfoundland for 1949 and 1950.

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THE NATIONAL ACCOUNTS National Income, Product and Expenditure
National Income is the total of the annual earnings of Canadian residents from the production of goods and services. As such it includes salaries, wages and other forms of employee earnings in cash or in kind, as well as military pay and allowances. It includes corporation profits, interest, net rent, and the net income of farmers and others who are in business on their own account.
Gross National Product is the value at market prices of all the goods and services produced in a year by the labour, capital, and enterprise of Canadian residents. It is measured by adding together the costs of production. Part of these costs of production are the factor costs or, more simply, the earnings of the factors of production, labour, capital and enterprise; and the total of these factor costs is National Income. Indirect taxes and other costs such as depreciation allowances also enter into the cost of goods and services although they do not form part of the income of Canadians. They are, therefore, added to National Income to obtain Gross National Product. Subsidies on the other hand may be regarded as offsets to costs of production and are therefore deducted.
Gross National Expenditure measures the same aggregate as Gross National Product but in a different way. The goods and services produced in a year are either sold at home or abroad or added to inventories. Thus Gross National Expenditure is obtained by adding together all sales and adjusting them for imports and changes in inventories. While Canadian expenditure on imported goods and services is included in the total sales to consumers, to governments, and to business for capital account, it is not part of the disposition of Canadian production and is therefore deducted. But since foreign expenditures on Canadian goods and services, i.e., exports, form part of the earnings of Canadians in the Gross National Product, they are included in Gross National Expenditure.

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BILLIONS OF DOLLARS	BILLIONS OF DOLLARS
[DOT]939	1946	1947	1948	1949	1950
NOTE - 1949 ond 1950 include Newfoundland
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National Income and Product
Gross National Product was 8-6 per cent higher in 1950 than in 1949. After eliminating the upward price change it is estimated that the real increase was of the order of three to four per cent. This is much the most substantial increase recorded in the post-war years.
While the present estimates of changes in real product are not precise enough to be used without reservation, they probably give a good indication of trends and general magnitudes. From 1939 to 1946 the Gross National Product increased by more than 60 per cent in constant dollars. This rapid expansion of output was only possible through the fuller utilization of resources which were unemployed or under-employed at the beginning of the period. Starting from a position of relatively full utilization of resources in 1946, gains in real product have naturally been much less spectacular in the post-war period. Recent estimates indicate a real increase of something approaching 11 per cent for the period 1946 to 1950, excluding the effect of Union with Newfoundland. For the first three years of this period the gains in real product appear to have been just about enough to keep step with population increases. For the year 1950, however, real product per capita increased by something more than one per cent. This larger rate of increase is substantiated in some measure by the rise of 7-6 per cent in the index of industrial production from 1949 to 1950. Part of this gain could be explained by the very heavy post-war investment in new plant and equipment.
Income received in the form of wages and salaries was 6 [DOT] 4 per cent higher in 1950 than in 1949 but the rate of increase was much higher in the latter part

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national income and gross national product
1946
Prelim.
1950>
(Millions of Dollars)
1. Salaries, wages and supplementary labour income	2,583	5,322	7,800	8,3002. Military pay and allowances	32	340	115	1373. Investment and miscellaneous2 income	7832	1,9872	2,3672	2,99624. Net income of agriculture and other unincorporated business-	fa) Farm operators from farm production3. . ..	461s	1,1303	1,5133	1,424'(b) Other unincorporated business	430	1,040	1,374	1,4515. NATIONAL INCOME (1+2+3+4)	4.289	9,819	13,169	14,3086. Indirect taxes less subsidies	737	1,269	1,831	2,0017. Depreciation allowances and similar business costs	5S2	846	1,321	1,4718. Residual error of estimate	-10	74	61	119. Gross National Product at .Market Prices	(5+6+7+S)	5,598	12,008	16,382	17,79110. G.N.P. inConstant (1935-39) Dollars	5,523	8,902	9,648	9,9821	Includes Newfoundland which is estimated to increase Gross National Product by slightly more than one per cent.2	Includes undistributed wheat board trading profits, and inventory revaluation adjustment for grain in commercial channels which together total: 1939, -56; 1946, 33; 1949, -110; 1950, 109.3	Adjusted for change in farm inventories; but not adjusted for undistributed wheat board trading profits which were as follows: 1946, 37; 1949, -98; 1950, 62.
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of the year, November, 1950, being nearly 11 per cent above November, 1949. Farm income, which is based for the most part on cash receipts, was lower in 1950 than in 1949 although the volume and value of agricultural production were both higher. This is very largely the result of the lower initial payment price for wheat and the lower equalization and adjustment payments in 1950. In 1949 for example, wheat board disbursements to producers were almost $100 million greater than the value of grain received, whereas in 1950 they were about $60 million less. If adjustment were made for this variation in wheat board disbursements, farm income would show an increase of about 5 per cent from 1949 to 1950.
Investment income, excluding technical adjustment for inventory revaluation and undistributed wheat board trading profits, increased by 16 per cent between 1949 and 1950. More than 90 per cent of this increase was due to the estimated 20 per cent increase in corporate profits before taxes. Corporate profits which actually declined in 1949 have been much more sensitive to business activity than has labour income which showed increases of 7-6 per cent in 1949 and 6-4 per cent in 1950. It is impossible to determine how much of the improvement in corporate earnings is attributable to improved business conditions and how much to the heavy post-war investment in new plant and equipment.
National Expenditure
During 1950 Canadians produced goods and services three to four per cent greater in real terms than in 1949. The full amount of this additional output was absorbed at home as well as a further amount represented by the more than $300 million excess of imports of goods and services over exports.
Personal expenditure on consumer goods and services increased by $724 million or 6-5 per cent. If account is taken of price and population increases the gain in real consumption per capita was less than one per cent.

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-	1939	1946	1949>	Prelim. 195011.	Personal expenditure on consumer goods and services 2.	Government expenditure on goods and services.... 3.	Gross home investment-	3,861 724 554 327 1,451 -1,328 9	(Millions c 8,018 1,832 1,362 538 3,210 -2,878 -74	r Dollars) 11,086 2,106 2,970 108 4,011 -3,837 -62	11,810 2,333 3,163 805 4,173 -4,482 -11
4. Export of goods and services (2)					
5. Import of goods and services (2)					
6. Residual error of estimate					
7.	Gross National Expenditure at Market Prices (1+2+3+4+5+0). 8.	G.N.E. inconstant (1935-39) Dollars	5,598 5,523	12,908 8,902	16,382 9,648	17,791 9,982
1 Includes Newfoundland.
2. Minor adjustments have been made to the figures of current receipts and payments shown in Table 12 and in "The Canadian Balance of International Payments, 1926 to 1949", Dominion Bureau of Statistics, to achieve consistency with the other component series.
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Investment in plant, equipment and housing again constituted about 18 per cent of Gross National Expenditure although some slight decline in volume is indicated. Investment in inventories showed a very sharp increase of $805 million. It is very difficult to separate the volume and price components of inventory change but present estimates suggest that the volume increase may not be much more than half the above amount.
Government expenditure on goods and services increased by approximately 13 per cent, exclusive of changes in government held inventories. Defence needs accounted for more than three-quarters of the federal increase whereas higher operating costs and expanding capital programs were the major factors in increases at the provincial and municipal levels.
Personal Income and Its Disposition
For purposes of relating the saving and spending of Canadians to their incomes, personal income is a much more useful concept than National Income.
Personal Income differs from National Income in a number of ways. It is defined as the sum of current receipts of income regardless of whether these receipts are earnings from production. Thus it includes only that part of corporation profits which is actually received by Canadian persons as dividends. Similarly deductions must also be made from employees' total earnings for unemployment insurance contributions or pension contributions which, although forming part of the compensation for services performed, are not actually received by the employee within the year. On the other hand, transfer payments such as family allowances, old age pensions, veterans' benefits and charitable contributions of corporations, are part of personal income although they are not payments for services and therefore do not form part of National Income.
Personal income rose by $616 million or 4-8 per cent in 1950 compared with an increase of $1,139 million or 8-6 per cent in National Income. The much more rapid increase in National Income is largely due to the fact that only part of the increase in corporation profits was reflected in increased dividend payments and hence in personal income. Salaries and wages, net of employer and employee contributions to social insurance and government pension funds,

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-	1939	1946	1949*	Prelim. 19501
		(Millions of Dollars)		
1. Salaries, wages and supplementary labour income..	2,583	5,322	7,800	8,300
Deduct: Employer and employee contributions to				
social insurance and government pension funds.	-34	-149	-238	-2682. Military pay and allowances	32	340	115	1373. Net income of agriculture and other unincorporated	business	891	2,170	2,887	2,8754. Interest, dividends and net rental income of persons	56-1	871	1,177	1,2425. Transfer payments to persons (excluding interest)	fa) from government	249	1,106	947	1,016(b) charitable contributions made by corpora-	tions	6	11	23	256. Personal Income (1+2+3+4+5)	4,291	9,671	12,711	13,327
' Includes Newfoundland.

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accounted for $470 million or 76 per cent of the increase in personal income between 1949 and 1950. Net income of unincorporated business was almost unchanged, the decline in farm income largely as a result of lower wheat board disbursements to producers, being offset by a gain in the incomes of other unincorporated businesses.
Government transfer payments were about 7 per cent higher than in 1949. Substantial increases totalling $69 million for family allowances, old age pensions and unemployment insurance benefits were partially offset by a decline of $17 million in payments to veterans.
While personal income increased by $616 million between 1949 and 1950, disposable income increased by a greater amount because of the decline of $46 million in personal direct taxes paid. Thus, after payment of direct taxes, Canadians had $662 million additional income in 1950, which they could either save or spend. Actually they spent $724 million more on consumer goods and services in 1950 than in 1949 so that personal saving from current income declined.
Consumer spending on durable goods such as automobiles and household appliances increased by the greatest percentage-25-2 per cent by value and 21-4 per cent by volume. Expenditure on perishable goods such as food, tobacco and beverages increased more moderately, 4-6 per cent by value and 1-4 per cent by volume. The estimates indicate an actual decline in both the value and volume of spending on semi-durable goods such as clothing and house furnishings. Consumer spending on services which includes items like rents, household operation and medical care increased by 7 [DOT] 3 per cent in value and 1-2 per cent in volume. The price increase for the services group as a whole was larger than for any of the main categories of goods.
Total real consumption per capita was less than one per cent higher than in
1949.	The whole of this per capita increase was concentrated in the durable goods category.


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1939	1940	1941	1942	1943	1944	1945	1946	1947	1948	1949	1950
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The Budget-Appendix

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-	1939	1946	1949'	Prelim. 19501 .
		(Millions of Dollars)		
1. Personal direct taxes				
(a) income taxes	61	711	675	612(b) succession duties	28	54	55	64(c) miscellaneous taxes	21	31	57	65Total direct taxes	110	796	787	7412. Personal expenditure on consumer goods and services- Goods- (a) Perishable	1,644	3,809	5,319	5,562(b) Semi-durable	553	1,386	1,925	1,913(c) Durable	245	487	934	1,169Services	1,475	2,347	2,985	3,202Net Personal Expenditure Abroad	-56	-11	-77	-36Total Consumer Expenditure	3,861	8,018	11,086	11,8103. Personal saving- fa,) personal saving excluding farm inventories....	260	898	911	645(b) change in farm inventories	60	-41	-73	131Total personal saving	320	857	838	7764. Personal Income (1+2+3)	4,291	9,671	12,711	13,327
1 Includes Newfoundland.
Source and Disposition of Saving
Saving may be regarded as the source from which investment expenditure is financed. Income arising out of production may either be spent or saved. At the same time production will be absorbed either by consumption expenditure, or by investment expenditure at home for new plant, equipment, housing, or additions to inventory, or by investment abroad. Saving must therefore equal investment. It is therefore possible to construct tables which show on the one hand, the sources of saving and on the other, the use of these savings to finance gross investment at home or investment abroad.
In addition to personal saving which was mentioned above there can be government saving and business saving. If, for example, the government has a surplus of revenue over expenditure this surplus constitutes part of the Nation's saving. If there is a government deficit it is an offset to the total of private saving by individuals and businesses.

The Budget-Appendix

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-	1939	1946	1949'	Prelim. 19501
		(Millions of Dollars)		
Personal saving	320	857	838	776Undistributed corporation profits	219	469	601	730Undistributed Wheat Board Trading profits	37	-98	62Inventory revaluation adjustment2	-58	-4	-12	47Depreciation allowances	582	846	1,321	1,471Adjusted Government Surplus (+) or deficit (-)3	-42	-121	479	551Residual error of estimate4	-10	74	61	11Total	1,013	2,158	3,190	3,6481	Includes Newfoundland.2	The adjustment has been made only to grain held in commercial channels.3	See Table 10 and page 14.4	See Tables 1 and 2.
Personal saving declined from $838 million in 1949 to $776 million in 1950 despite the substantial increase of $616 million in personal income and the even larger increase of $662 million in disposable income. Saving excluding saving in farm inventories, which is to some extent involuntary, declined from $911 million to $645 million or from 7-2 per cent to 4-8 per cent of personal income. Greatly increased buying of consumer durables was an important factor in the decline in the rate of personal saving.
As in 1949 slightly more than 15 per cent of the Nation's saving was made up of the combined surplus of federal, provincial and municipal governments. In both years the calendar year surplus of the federal government was partially offset by the deficits of provincial and municipal governments.
Variation in wheat board disbursements to producers accounted for a substantial change in the composition of private saving. In 1949 disbursements exceeded the value of grain received so that a negative amount appears in the savings table under the heading Undistributed Wheat Board Trading Profits. In 1950, however, disbursements were less than the value of grain received so that a saving or accumulation of income is recorded.
The pace of economic activity during 1950 is reflected in the increase in corporate profits before tax which are presently estimated to be about 20 per cent

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-	1939	1946	1949'	Prelim. 1950'
		(Millions of Dollars)		
Gross Home Investment		881	1,900	3,078	3,968
Net increase in foreign assets (including foreign				
exchange) adjusted2	123	332	174	-309Residual error of estimate3	9	-74	-62	-11Total	1,013	2,158	3,190	3,6481	Includes Newfoundland.2	Minor adjustments have been made to the figures appearing in Table 12.3	See Tables 1 and 2.
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higher than in 1949. Corporate profits after tax were $231 million higher than in 1949. Despite the estimated increase of $102 million in dividends paid out, undistributed profits increased by more than 21 per cent to $730 million.

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-	1939	1946	19491	Prelim. 19501618 -112	(Millions 1,450 -654	>f Dollars) 1,898 -727	2,270 -868
506 -287	796 -327	1,171 -570	1,402 -672
				
				
	219	469	601	730
				
1	Includes Newfoundland.
1 Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis.
* Tares paid or payable in respect of the calendar year's income, excluding the refundable portion of the excess profits tax. (See Table 10).
4 Includes charitable contributions made by corporations. (See Table 3 Item 5(b)).
' See Table 5.
Investment
Investment in plant, equipment and housing continued to make large demands on saving. But the largest single increase in investment appears to have been in net addition to inventories. In total, gross home investment increased by almost $900 million, or about $430 million more than the increase in private and public saving. At the same time, however, there was a very significant decline in Canada's net investment abroad from $174 million in 1949 to -$309 million in 1950. (For more detailed discussion of net foreign investment see section on Balance of International Payments).

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1939	1946	1949*	Prelim. 19501
		(Millions of Dollars)		
Plant, Equipment, and Housing-Total1 2	554	1,362	2,970	3,163New Residential Construction	145	338	741	782Other New Construction	126	449	906	1,003New Machinery and Equipment	283	575	1,323	1,378Change in Inventories-Total	327	538	108	805Grain in Commercial Channels3	127	-41	-12	55Farm Grain and Livestock3	60	-41	-73	131All Other Inventories4	140	620	193	619Gross Home Investment5	
Percentage of Gross National Expenditure	881 16%	1,900 16%	3,078 19%	3,968 22%1	Includes Newfoundland.2	Includes private businesses and institutions, and publicly owned public utilities.3	Value of physical change.4	Change in value. Includes privately financed industrial and trade inventories.
6 See Table 2, Item 3.

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Public and Private Capital Expenditure
Table 9 brings together business capital expenditures, which are included in Table 8 above, and public capital outlays included under government expenditure in Table 2. The total of public and private capital expenditure increased by $300 million or 8-6 per cent between 1949 and 1950. Capital expenditure in manufacturing showed the only decline in value. Capital expenditure by government departments showed the largest increase, 17-9 per cent and accounted for almost one-quarter of the total value increase from 1949 to 1950. The larger part of the increase in public capital expenditure came from provincial and municinal rather than federal spending.
The forecast for 1951 is for a further large increase in capital expenditure, amounting to 14 [DOT] 2 per cent by value and 6 per cent by volume. Largest elements in this are the forecast increases for manufacturing industries and government departments both of which are associated with expanding defence requirements.
table 9
public and private capital expenditure
-		1946	1948	1949'	Prelim. 1950'	Forecast 19511 3
			(Millions of Dollars)			
Agriculture and Fishing	182	351	419	442	420Forestry	14	29	26	30	34Mining, Quarrying and Oil Wells	39	105	122	134	164Manufacturing	337	579	536	519	716Electric Power, Gas and Water Works	77	248	337	369	442Transportation, Storage and Communications.	174	318	341	375	450Construction Industry	33	59	55	62	40Trade, Finance and Commercial Services	137	281	294	362	369Institutions	74	145	190	210	270Housing	412	668	768	813	827Government Departments	224	394	403	475	596Total Capital Expenditure3	1,703	3,177	3,491	3,791	4,328Total Capital Expenditure as a	per-	centage of Gross National	Ex-	penditure	14-2	20-5	21-3	21-3	Total Capital Expenditure in Constant (1935-1939) Dollars	1,142	1,630	1,711	1,732	1,836
1 Includes Newfoundland.
* Source: "Private and Public Investment in Canada, Outlook, 1951" published jointly by the Economic Research Branch, Department of Trade and Commerce and the Dominion Bureau of Statistics.
3 For reconciliation with Gross Home Investment in Table 8, see below
1949	1950
Public and Private Capital Expenditure-Table 9	 3,491 3,791
Deduct:
Provincial hospitals and schools, and Municipal schools... -91	-122
Government housing exc. C.M.H.C. rental housing	
-27	-31Direct government department outlays	
-403	-475
Add:
Changes in Inventories	 108	805
Total Gross Home Investment-Table 8	 3,078 3,968
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Revenue and Expenditure op all Governments
In Table 10, "Government Transactions Related to the National Accounts", an attempt is made to bring together in one statement and under uniform headings, the activities of all governments in Canada on a calendar year basis.
The table is designed to include only those transactions which have relevance for the National Accounts, and consequently the surpluses or deficits shown here do not agree with those shown in the various public accounts. It has been necessary to adjust the conventional accounting statements of fiscal year revenue and expenditure to exclude purely bookkeeping transactions as well as the purchase and sale of existing capital assets. Extra-budgetary funds such as unemployment insurance, workmen's compensation and pension funds have been added, and surpluses or deficits of Government enterprises are likewise included. In the federal accounts some of the more substantial adjustments are as follows: elimination of reserve for possible losses on active assets, elimination of reserves for veterans' conditional benefits, elimination of expenditures charged with respect to assumption of Newfoundland debt, elimination of expenditures charged with respect to shipment of World War II military equipment to Europe under the North Atlantic Treaty, elimination of write down of active assets to non-active account, allocation of war refunds to prior years, adjustment of corporate taxes to an accrual basis, and elimination of sales of war assets to business. In addition the federal figures have been adjusted to a calendar year basis by using the monthly figures published by the Comptroller of the Treasury. Government loans to foreign countries or accumu-lat on of gold or foreign exchange are not included with government expenditure.
For purpose of analysis, expenditures by governments may be divided into two main categories: expenditures for the purchase of goods and services, and so-called transfer payments, i.e., family allowances, old age pensions, veterans' benefits, the greater part of the interest on the public debt, etc., which do not

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arise from current production of goods and services. The first category represents the demands which governments place on the annual output of the nation. Transfer payments, on the other hand, simply add to the sums available for spending or saving by the recipient.
The federal surplus was larger in the calendar year 1950 than in 1949 although expenditures were rising. This was largely the result of increased revenues from indirect taxes and taxes on corporations. Federal government expenditure on goods and services increased less in 1950 than provincial and municipal expenditure despite the fact that more than three quarters of the federal increase was accounted for by expanding defence needs.

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PERCENT	PERCENT
1939	1940	1941	1942	1943	1944	1945	1945	1947	1948	1949 '	1950
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Government Revenue- Direct Taxes-Persons..
1946
Prelim.
(Millions of Dollars)
787
Income and Excess Profits-
Federal	
Provincial and Municipal.. Succession Duties-
Federal	
Provincial	
Miscellaneous-
Federal	
Provincial and Municipal..
15
674
612
20	26
34	29
30
18
25
50
58
Direct Taxes-Corporations...
Income and Excess Profits-
Federal	
Provincial	
Withholding taxes-Federal.
683
922
98	652	59714	2	13011	29	47
138
Indirect Taxes	
Federal	
Provincial and Municipal
1,505
1,908
2,060
410
957	1,048
548	860
1,115
Investment Income	
Federal	
Provincial and Municipal
-11
375
221
130
409
249
Employer and Employee Contributions to Social Insurance and Government Pension Funds	
Federal	
Provincial and Municipal	
6
149
71
141
268
110
Transfers from Other Governments- Provincial and Municipal	
174
256
Total Revenue	
Federal	
Provincial and Municipal
1,169
3,682
4,266
4,656
463	2,607
706	1,075
2,670	2,870
1,596	1,786
Deficit (or surplus-)	
Federal	
Provincial and Municipal
-4
121
-111
-524
-551
35
Total Revenue plus Deficit (or minus Surplus)..
Federal	
Provincial and Municipal	
1,211
3,803
3,787
4,105
459	2,839
752	964
2,146	2,284
1,641	1,821
1 Includes Newfoundland.

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TABLE 10-Concluded

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-	1939	1946	19491	Prelim. 19501
		(Millions op Dollars)		
Government Expenditure-				
Goods and Services	724	1,832	2,106	2,333Federal	214	1,090	869	948Provincial and Municipal	510	742	1,237	1,385Transfer Payments	421	1,561	1,422	1,457Federal	180	1,344	1,022	1,025Provincial and Municipal	241	217	400	432Subsidies	-17	236	77	59Federal	-18	231	73	55Provincial and Municipal	1	5	4	4Transfers to Other Governments-	Federal	83	174	182	256Total Expenditure	1,211	3,803	3,787	4,105Federal	459	2,839	2,146	2,284Provincial and Municipal	752	964	1,641	1,821
1 Includes Newfoundland.
1854
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Canada's civilian labour force was estimated to be approximately the same size at the time of the November 1950 labour force survey as it had been at the same date a year earlier. On November 4, 1950, the labour force was estimated at 5,201,000 compared with 5,200,000 on October 29, 1949. The agricultural labour force, however, showed a substantial decline from 1,058,000 to 974,000. This decrease was almost exactly offset by an increase of 85,000 in the size of the non-agricultural labour force, from 4,142,000 to 4,227,000.
Although the labour force was practically unchanged, the number of persons employed on November 4, 1950 was 5,084,000 or 31,000 above the figure for the previous year. Unemployment, defined as those without jobs and looking for work, after reaching a post-war peak in March, 1950, fell to 117,000 on November 4, little more than 2 per cent of the labour force and well below the 147,000 registered on a similar date in 1949.
The following table presents a picture of the civilian labour force on comparable dates for the years 1946-1950. The data for 1949 and 1950 include Newfoundland.

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THE LABOUR FORCE1 (Thousands of Persons)
-	Nov. 9 1946	Nov. 8 1947	Nov. 20 1948	Oot. 29 1949	Nov. 4 1950Civilian Labour Force	4,848	4,934	4,964	5,200	5,201Exclusive of Newfoundland	-	-	-	6,086	6,098Male	3,797	3,861	3,925	4,096	4,083Female	1,051	1,073	1,039	1,104	1,118Agricultural	1,076	1,073	991	1,058	974Non-Agricultural	3,772	3,861	3,973	4,142	4,227Unemployed	115	87	106	147	117Employed	4,733	4,847	4,858	5,053	5,084Agricultural	1,071	1,068	986	1,048	969Non-agricultural	3,662	3,779	3,872	4,005	4,115Paid workers	3,278	3,334	3,441	3,580	3,683Farm	125	116	110	126	102Non-farm	3,153	3,218	3,331	3,454	3,581Self-employed	1,123	1,163	1,139	1,167	1,107Farm	656	661	648	671	622Non-farm	467	502	491	496	485Unpaid Family Workers	332	350	278	306	294Farm	290	291	228	251	245Non-farm	42	59	50	55	49
1 Data for 1949 and 1950 include Newfoundland.

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An indication of the more recent trend in unemployment may be gathered from data on persons who have applied for jobs at National Employment Service offices. The average figures for January and February 1951 were 272,899 and 302,021 respectively. The comparable figures for January and February 1950 were 332,068 and 377,331. This is the pei'iod of highest seasonal unemployment but the figures indicate a considerable improvement over the same period a year earlier. Caution must be used in interpreting the figures as a measure of unemployment since they include some persons who had a job and exclude some unemployed persons who did not register. The figures for 1951 are probably higher than they should be for strict comparability with 1950 because of the legislation which came into force March, 1950, regarding supplementary unemployment insurance benefits. The figures for January and February 1951 will include some unemployed persons who were in insurable employment and had exhausted their benefits whereas similar persons would not have been eligible in 1950 and therefore might not have registered.
Labour income during 1950 was estimated at $8,300 million, 6-4 per cent higher than last year. The increase in income was particularly marked during the second half of the year, and was due both to higher employment levels in the non-agricultural industries and to higher weekly earnings. Per capita weekly earnings, in nine leading industries averaged $46-59 at December 1, 1950' compared to $43-71 at December 1, 1949. Average per capita weekly earnings; for 1950 were estimated at $44-84 and for 1949 at $42-96.
Changes in hours worked per week did not materially affect the size of labour income. In manufacturing, hours worked per week averaged 42-3, the same as the previous year.

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When goods are exported, unless thay are given away they give rise to payments or debts in favour of Canada. Similarly, when goods are imported they give rise to payments or debts in favour of the rest of the world. Other transactions such as interest and dividend payments, the tourist trade, freight and shipping charges, also give rise to similar payments or debts in either direction. The difference between the debits and credits arising from these current transactions is referred to as the net balance of international payments on current account. When total credits exceed total debits within a year, the rest of the world has gone into debt to Canada or Canada has paid off some of her debt to the rest of the world. When total debits exceed total credits, the net position is, of course, reversed.
1856
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Canada's deficit on current account of $316 million in 1950 represents an increase in net debits from 1949 of about $500 million. Although exports increased by $150 million, imports rose sharply in the last half of the year and total imports were $433 million higher than in 1949. As a result, Canada's merchandise trade in 1950 was in approximate balance, compared with the substantial surplus achieved in 1949. The largest single change in other current transactions was the increase of over 20 per cent in interest and dividend payments. Net tourist receipts also declined and freight and shipping showed a net debit compared with a credit in 1949.
During the year a significant shift occurred in the geographical pattern of Canadian trade. Exports to the United States rose by over $500 million, an increase of 34 per cent. At the same time there was a very sharp decline in

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BALANCE OF INTERNATIONAL PAYMENTS Estimated Current Account Between Canada and all Countries
(Millions of Canadian dollars)
-	1939	1946	1949	1950
Current Credits				
Exports (adjusted)	906	2,393	2,989	3,139Non-monetary gold	184	96	139	163Tourist expenditures	149	221	286	275Interest and dividends	57	70	83	93Freight and shipping	102	311	303	287Inheritances and immigrants' funds	{ 59}	{ 274}	66	56Other current receipts	211	216Total Credits	1,457	3,365	4,077	4,229*Current Debits	Imports (adjusted)	713	1,822	2,696	3,129Tourist expenditures	81	135	192	222Interest and dividends	306	312	390	474Freight and shipping	119	219	253	301Inheritances and emigrants' funds	I112}	53	63Other current payments	l 614J	306	356Total Debits	1,331	3,002	3,890	4,545Net Balance on Current Account	+126	+363	+187	-316
Estimated Geographical Distribution of the Net Balance on Current Account
-	1939	1946	1949	1950Between Canada and-	-116 +137 +39 {+66}	-607 +500 +164 { +306}	-589 +439 +135 +187 +15	-394 +33 -26 +112 -41
+126	+363	+187	-316
				

The Budget-Appendix
exports to the United Kingdom and other sterling area countries, from approximately $1,000 million in 1949 to less than $700 million in 1950. Canadian imports from the sterling area increased by $150 million during the same period. These marked changes have brought Canada more nearly into balance with the principal trading areas as shown in Table 12.
Compared with 1949 Canadian exports of goods and services in 1950 rose by about 4 per cent in value although the volume is estimated to be approximately the same. Imports on the other hand increased by 17 per cent in value and 9 per cent in volume.
Notwithstanding the current account deficit, the official reserves of gold and United States dollars rose by $625 million in 1950. This increase was due primarily to the very heavy inflow of capital from the United States, a large part of it in the third quarter of the year. The available details of the transactions on capital account in 1950 are compared in the following table with similar transactions in 1949:
(Millions of Canadian dollars)
1949	1950
Loans to United Kingdom and other governments (gross)	
-120	-50Less Repayments	
+18	+73Government of Canada borrowing in the United States (U.S. dollars)....	-	-50
Increase (-) in official reserves of gold and United States dollars (expressed
in U.S. dollars)	
-119	-625Other capital, including exchange adjustments,	errors	and omissions	
+34	+968Total1	
-187	+316
1 Equal in size but opposite in sign to net balance on current account.

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MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
3000
+
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3000 4500
1946	1947	1948	1949	1950
3000
1500
4500
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CANADA'S HOLDINGS OF GOLD AND U.S. DOLLARS (milliona of U.S. dollars) 1
-	Exchange Fund Account and Bank of Canada	Other Government of Canada Accounts	Private2	TotalGold	U.S. dollars	U.S. dollars	U.S. dollars	Gold and U.S. dollarsSept. 15, 1939	204-9	33-8	22-4	132	393-1Dec. 31, 1939	218-0	54-8	33-4	98	404-2Dec. 31, 1940	136-5	172-8	20-8	2	332-1Dec. 31, 1941	135-9	28-2	23-5	187-6Dec. 31, 1942	154-9	88-0	75-6	318-5Dec. 31, 1943	224-4	348-8	76-4	649-6Dec. 31, 1944	293-9	506-2	102-1	902-2Dec. 31, 1945	353-9	922-0	232-1	1,508-0Deo. 31, 1946	536-0	686-3	22-6	1,244-9Dec. 31, 1947	2a6-6	171-8	43-3	501-7Dec. 31, 1948	401-3	574-5	22-0	997-8Dec. 31, 1949	486-4	594-1	1 36-6	1,117-1Dec. 31, 1950	580-2	1,144-9	16-6	1,741-7
1 Not including $18-2 million in United States dollars borrowed by the Government of Canada in August, 1949, and set aside for the retirement on February 1, 1950, of a security issue guaranteed by it and payable at the holder's option in United States dollars.
! Exclusive of working balances.


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The general level of prices in Canada showed very little change between the summer of 1948 and the spring of 1950, but since May, 1950, there has been a sharp increase of about 17 per cent in wholesale prices and 9 per cent in the cost of living index. These recent price increases have not been peculiar to the Canadian scene but are very much in evidence elsewhere in the world.
For the year 1950, wholesale prices averaged more than 6| per cent above 1949 and in December, 1950, were approximately 14 per cent above December, 1949. The more rapid price increase in the latter part of 1950 has been continued in 1951 with the wholesale price index for February, 20 per cent above a year ago and 6 per cent above December, 1950. Prices of fully and chiefly manufactured goods moved in a manner similar to the total index with the greatest increase in the latter part of 1950 and early 1951. The index of Canadian farm products unlike the total wholesale index, showed a more rapid increase in the first part of 1950 and reached a post-war high in July at a point more than 11 per cent above that of the beginning of the year. The index then declined in the last half of 1950 so that during December it was about 5 per cent above the previous year. However, there has again been a strong advance in farm prices and the index for February 1951, is more than 8 per cent above December, 1950.
The slight downward movement indicated in the cost of living index toward the end of 1949 was reversed in the spring of 1950 and the index moved steadily upward during the rest of the year. For the year as a whole the index averaged 3J per cent above 1949 but at December 1, 1950, it was 5-9 per cent above December, 1949. A large part of the increase in the cost of living index is accounted for by the rise of 8 to 9 per cent in food and rents which together constitute half the weight in the cost of living budget. As with wholesale prices the increase has accelerated in recent months with the March 1, 1951, cost of living index 9 [DOT] 8 per cent above March 1, 1950, and 5 [DOT] 0 per cent above December, 1950.

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(1935-39 = 100)
Monthly Averages	Total	Canadian Farm Products	Fully and Chiefly Manufactured Goods1939 	99-3	92-6	101-91940 	108-2	96-1	109-91941 	116-6	106-6	118-81942 	123-3	127-1	123-71943	128-3	145-4	126-91944	130-9	155-3	129-11945	132-4	165-3	129-81946	139-2	177-0	138-01947	163-6	189-7	162-41948 	193-9	229-6	192-41949 	198-9	226-2	199-21950	212-4	231-5	211-0199-9	219-2	200-3200-9	222-0	201-0202-4	226-9	202-4203-6	228-8	203-0205-8	231-6	204-1210-3	240-9	207-1213-2	244-3	209-2216-9 223-8	236-3	213-6234-9	221-5221-3	228-5	220-8223-7	230-4	223-2226-4	234-5	225-5233-8	242-2	233-6February	240-0	253-7	240-0
Note-1950 and 1951 indexes are preliminary.
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COST OF LIVING INDEXES (1935-39=100)
	Canada		United States	
Total	Food	Total	Food1939	101-5	100-6	99-4	95-21940	105-6	105-6	100-2	96-61941	111-7	116-1	105-2	105-51942	117-0	127-2	116-5	123-91943	118-4	130-7	123-6	138-01944	118-9	131-3	125-5	136-11945	119-5	133-0	128-4	139-11946	123-6	140-4	139-3	159-61947	135-5	159-5	159-2	193-81948	155-0	195-5	171-2	210-21949	160-8	203-0	169-1	201-91950	166-5	210-9	171-9*	204-5 '1950-January	161-0	199-4	168-2	196-0February	161-6	201-3	167-9	194-9March	163-7	204-0	168-4	196-6April	164-0	204-5	168-5	197-3May	164-0	204-6	169-3	199-8June	165-4	209-0	170-2	203-1July	167-5	214-3	172-0	208-2August	168-5	216-7	173-4	209-9September	169-8	218-8	174-6	210-0October	170-7	220-1	175-6	210-6November	170-7	218-6	176-4	210-8December	171-1	218-8	178-8	216-31951-January	172-5	220-2	181-5	221-9February	
March	175-2 179-7	224-4 233-9	183-8	226-0
*Adjusted seiies United States Consumers' Price Index from January, 1950, forward. Source: Bureau of Labour Statistics.

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The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	
572.	Highlights of Governmental Financial Operations	during 1950-51	
573.	The Budgetary Accounts	
58A.	Analysis of Revenues	
60B.	Analysis of Expenditures	
684.	The Cash Accounts	
775.	Estimated Balance Sheet Position	at March 31.	1951	
79
A. Analysis of Changes in Principal Liability Classifications during 1950-51.... 81
B. Analysis of Changes in Principal Active Asset Classifications during 1950-51. 82
C.	Decrease in Net Debt	
866.	The Public Debt	
877.	Supplementary Detailed Tables	
93
*119
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<* CROSS NATIONAL PRODUCT AS OF CALENDAR YEAR ENDING DECEMBER 31 WITHIN FISCAL YEAR * ESTIMATE

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1.	INTRODUCTION
1.	Although the Government's fiscal year ended on March 31st, the books must remain open for several weeks after that date in order to record various adjusting entries and to take into account all payments up to and including April 30th made on account of expenditures originating in, and properly chargeable to, the fiscal year 1950-51. Consequently, as final figures for that year will not be available for some considerable time, the figures appearing in this Part must be regarded as preliminary and subject to revision.
2.	HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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2.	The revenues of the Government for the year ended March 31, 1951 are now estimated at $3,105 million, the largest total yet recorded. As expenditures for the year are estimated at $2,902 million, the fiscal year 1950-51 is the fifth successive year the financial operations of the Government will result in a budgetary surplus. On the basis of these figures it would appear that the Government's budgetary surplus will probably total something in the neighbourhood of $203 million compared with $131 million for the year ended March 31,
1950.	As a result the Government's net debt (the excess of total liabilities over total active assets) will be reduced by an equivalent amount. This will bring to a total of $1,980 million the amount by which the Government has reduced its net debt during the past five fiscal years. This reduction is approximately equivalent to the amount by which the Government's net debt increased during the first three and one half years after the outbreak of war in 1939.
3.	While the budgetary surplus for 1950-51 is estimated at $203 million, the Government has been able to make loans and advances and other non-budgetary disbursements of more than $600 million and at the same time to purchase or retire outstanding funded debt to the extent of over $200 million. The manner in which this has been achieved may best be understood by taking an over-all view of the Government's cash transactions for the year. As explained in greater detail in the section on "The Cash Accounts", all the Government's cash receipts and disbursements are not reflected in the budgetary accounts, nor do all budgetary transactions result in the inflow or outgo of cash. Substantial amounts are received and paid out for extra-budgetary purposes (such as the loans and advances which the Government is required to make and the transactions in connection with the many superannuation, insurance, pension, annuity and deposit and trust accounts which it has undertaken to hold or administer.) On the other hand a substantial part of the budgetary revenues and expenditures are merely of an accounting or bookkeeping nature and do not result in the receipt or disbursement of cash.
4.	While the Government's budgetary surplus for the fiscal year was $203 million this does not reflect the full economic impact of Government operations upon the economy. When the budgetary surplus is adjusted for non-cash transactions, there remains an amount of about $642 million. This sum, together with $150 million from repayments of loans, investments and working capital advances, net insurance, pensions and annuity contributions, and other non-budgetary cash receipts made $792 million cash available for making necessary loans and investments and other extra-budgetary outlay. During the fiscal year cash payments amounting to $612 million for loans and investments
80709-119J
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and for other non-budgetary purposes which would otherwise have required additional borrowing, were made out of available cash resources. As a result of all these transactions, the cash surplus for the fiscal year was $181 million. By using this amount and by allowing the Government's cash balances to be reduced by $25 million, funded debt amounting to $116 million was retired and securities amounting to $90 million were acquired for the Government's investment portfolios (mainly the Unemployment Insurance Fund).
3.	THE BUDGETARY ACCOUNTS
5.	The table which follows gives a summarized statement of revenues and expenditures for the fiscal year ended March 31, 1951, with the comparable figures for the four preceding fiscal years. More detailed tables in comparative form may be found at the end of this Part.
SUMMARY OF REVENUES AND EXPENDITURES (In millions of dollars)
Fiscal Year Ended March 31
-	1947	1948	1949	1950	Estimated 1951$	$	$	$	$Revenues	2,588-5 0-1	2,629-8 0-1	2,649-1 0-1	2,528-7 0-1 51-3	3,012-7 0-1 92-5Capital refunds	419-3	241-8	122-2	
Total Revenues		3,007-9	2,871-7	2,771-4	2,580-1	3,105-3
					
Expenditures					
Ordinary expenditures		1,236-2 11-2	1,380-0 15-7	1,573-4 18-5	1,701-3 22-9	2,681-0 16-5
					
War, demobilization and reconversion					
expenditures	1,314-8 31*9	634-4	425-6	468-6 37-9 52-4	Special expenditures	63-1	34-8 39-7	113-6 8-410-7	18-7	Other charges, including the write down	of assets	29-4	83-7	83-9	165-5	82-3
2,634-2	2,195-6	2,175-9	2,448-6	2,901-8
					
Budgetary Surplus		373-7	676-1	595-5	131-5	203-5
					
6.	Total revenues, estimated at $3,105 million for 1950-51 are expected to show an increase of $525 million over the total for the previous year. Total expenditures are estimated at $2,902 million, or $453 million more than the corresponding total for 1949-50.
7.	Ordinary revenues are estimated at $3,013 million, an increase of $484 million over the total for the previous year. The total of $92 million for special receipts and credits represents an increase of $41 million over the total of $51 million received in 1949-50.
8.	On the expenditure side, the total of ordinary expenditures for 1950-51 shows an increase of $511 million over the combined total of ordinary and demobilization and reconversion expenditures for the previous year (from $2,170

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5000
3000
1000
5000
3000
1000

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million in 1949-50 to $2,681 million in 1950-51). The increase was attributable chiefly to increases of $388 million in National Defence expenditures, $76 million in the Government's contribution to the Civil Service Superannuation Fund, and $20 million in subsidies and compensation to provinces. An increase of $76 million in special expenditures (attributable largely to additional payments to the Canadian Wheat Board and emergency grants and payments in connection with flood and fire disasters) was offset by decreases of $6 million in capital expenditure, $44 million in government owned enterprises (reflecting a substantial decrease in the deficit of Canadian National Railways for the calendar year 1950) and $83 million in other charges (due largely to the absence in the year under review of any item comparable to the charge of $62 million in 1949-50 in connection with the assumption by Canada of part of the Newfoundland debt in accordance with the Terms of Union).
A. Analysis of Revenues
9.	Estimated revenues for the year 1950-51, classified according to major categories are presented in the following table, along with corresponding figures for the'previous fiscal year.

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(In millions of dollars)
	Fiscal Year Ended March 31				Increase or Decrease (-)	
Source	1951 (Estimated)	1950	Amount	PercentAmount	Percent	Amount	Percent	Ordinary revenues- Direct taxes-	Personal income tax	652-0	21-0	622-0	24-1	30-0	4-8Non-resident income taxes	62-0	2-0	47-5	1-8	14-5	30-5Corporation income tax	800-0	25-8	603-2	23-4	196-8	32-610-0	0-3	-1-8	-0-1	11-8	Succession duties	34-0	1-1	29-9	1-2	4-1	13-7Total direct taxes	1,558-0	50-2	1,300-8	50-4	257-2	19-8Indirect taxes-	Customs import duties	298-0	9-6	225-9	8-7	72-1	31-9Excise duties	245-0	7-9	220-6	8-6	24-4	11-1Excise taxes	675-0	21-7	571-5	22-2	103-5	18-1Other taxes	4-9	0-2	4-4	0-1	0-5	11-4Total indirect taxes	1,222-9	39-4	1,022-4	39-6	200-5	19-6Total tax revenues	2,780-9	89-6	2,323-1	90-0	457-8	19-7Non-tax revenues-	Post office	90-0	2-9	84-5	3-3	5-5	6-5Return on investments	89-1	2-9	91-5	3-5	-2-4	-2-6Other non-tax revenues	52-7	1-6	29-6	1-2	23-1	78-0Total non-tax revenues	231-8	7-4	205-6	8-0	26-2	12-7Total ordinary revenues	3,012-7	97-0	2,528-7	98-0	484-0	19-1Special receipts and credits	92-6	3-0	51-4	2-0	41-2	80-2Total revenues	3,105-3	100-0	2,580-1	100-0	625-2	20-4
Note: Due to rounding off, columns may not add exactly to totals shown.

The Budget-Appendix
10.	It will be noted that 50-2 per cent of grand total revenues for the year was derived from direct taxes, 39-4 per cent was obtained from indirect taxes, and the remaining 10 [DOT] 4 per cent was attributable to non-tax revenues and special receipts and credits.
Tax on Personal Incomes
11.	The personal income tax yielded an estimated total of $652 million, an increase of $30 million over 1949-50. As the same rates have been in effect for the past two fiscal years the increase in revenue in 1950-51 is a reflection of the higher levels of income and employment which prevailed throughout the year.
Corporation Income Tax
12.	Corporation income taxes yielded an estimated total of $800 million making this the largest single source of revenue during the year. Collections from this tax showed an increase of $196-8 million over the previous year's total. This increase is attributable to higher profits in 1950 and also to the provision introduced in the 1950 budget which allowed private companies to capitalize their undistributed income on hand at the end of the 1949 taxation year upon payment of a tax of 15 per cent of the undistributed income. Nearly $91 million of the total taxes collected from corporations in 1950-51 represented the 15 per cent tax paid by private companies which have elected to take advantage of this provision.
13.	The increase in the rates of tax from 10 per cent to 15 per cent and from 33 per cent to 38 per cent effective from September 1, 1950 also accounts for part of the increase in revenue in 1950-51.
Excess Profits Tax
14.	The excess profits tax ceased to be levied on profits earned after December 31, 1947 but the clean-up payments received during the year exceeded the refunds and adjustments by about $10 million.


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1940	1941	1942	1943	1944 >945 1946	* 947 * 948 1949 1950	1951*
CUSTOMS IMPORTS & EXCISE DUTIES
OTHER REVENUES TOTAL REVENUE FROM TAXES (89 ®/o)
 tiTlMATC
1868	HOUSE OF COMMONS
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43	45	47
51 *

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rm
mi i
mini
1939	41
1 . *
^ ESTIMATE
43	45	47	49
5l *

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* *
iiiim
nm 111 ii 11111
600
200
1939	41
43	45	47	49
51 *

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..**milllll
1939	41	43	45	47	49	51*
1870
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Taxes on Interest, Dividends, Rents and Royalties
15.	Revenues under this heading come from withholding taxes on certain payments made to non-residents. The total of $62 million collected in 1950-51 is $14-5 million greater than in the previous year, an increase largely due to a higher level of dividend payments during 1950.
Succession Duties
16.	Revenue from succession duties is estimated at $34 million for 1950-51, an increase of $4-1 million over the previous year.
Customs Duties
17.	Net revenue from customs duties for the year is estimated at $298 million, an increase of $72-1 million over the total for 1949-50. This increase reflects the increased level of imports at higher prices during the year.
Excise Duties
18.	Excise duties are levied exclusively on alcoholic beverages and tobacco products. The estimated total revenue from this source for the year is $245 million. This is an increase of $24-4 million over 1949-50 due mainly to the higher rates of tax on malt and spirits levied in September, 1950. Gross receipts from these duties, before deducting refunds, are divided as follows: $132 million from alcoholic beverages ($107 million in 1949-50) and $116 million from tobacco products ($116 million in 1949-50).
Excise Taxes
19.	Excise taxes are levied on a variety of items under the Excise Tax Act. Total net collections for the year are estimated at $675 million, an increase of $103-5 million over 1949-50. This increase is due to higher levels of production and increased prices during the year and to the tax changes introduced in September 1950. At that time the rate of tax on all those items which had previously been subject to tax at 10 per cent was raised to 15 per cent and a number of items not previously taxed were made taxable at 15 per cent. In addition a tax of 30 per cent was levied on candy, chewing gum, and soft drinks.
20.	The most important tax under the Excise Tax Act from the point of view of revenue is the sales tax, which yielded an estimated gross revenue of $471-1 million, an increase of $55-9 million over the previous year.
21.	The second largest revenue source among the excise taxes is the tax on tobacco products which yielded approximately $83-2 million, slightly less than in the previous year.
22.	Almost all tax sources showed an increase in revenue over the previous year. The tax on automobiles and rubber tires and tubes, which yielded an estimated total of $63 million during the year, showed the largest increase amounting to $24-8 million over the previous year.

The Budget-Appendix
23. The tax sources showing the largest increases, and the amount of the
increase in each case, are given below.	
-	Estimated increase over 1949-50
	$24,807,000 9.370.000 5.773.000 2.523.000 2.300.000 2.099.000 1.363.000
	
	
	
	
	
	
	
Other Indirect Taxes
24.	Small amounts of tax revenue were derived from the tax on the net premium income of insurance companies; from a tax on the export of electric energy from Canada; and from a tax on the export of furs from the Northwest Territories. Total revenue from all these sources in 1950-51 is estimated at $4-9 million, an increase of $0-5 million over the previous year.
Non-Tax Revenues
25.	Non-tax revenues for 1950-51 are estimated at $231-8 million, an increase of $26-2 million over the 1949-50 total. The following table presents a comparative summary of revenues under this heading for the past two years:
-	Fiscal yc Mai 1951 (Estimated)	ar ended .31 1950	Increase or Decrease (-)(In n 90-0 89-1 18-0 4-8 8-7 4-2 12-7 2-0 2-3	lillions of do 84-5 91-5 4-5 7-6 2-9 11-2 1-5 1-9	liars) 5-5 -2-4 18-0 0-	3 1-	1 1-3 1-5 0-5 0-4
Premium, discount and exchange				
Privileges, licences and permits				
			
Refunds of previous years' expenditures				
Total non-tax revenue				
	231-8	205-6	26-2
26.	Post Office receipts are estimated at $90 million, an increase of $5-5 million over the total for the preceding year. As the total costs of operating the Post Office during the year are estimated at $92 [DOT] 1 million, it is expected that operating costs will exceed receipts by approximately $2 [DOT] 1 million. In making the comparison, however, it should be borne in mind that the total shown for Post Office receipts does not reflect the value of services rendered free of charge to other departments, nor does the total shown for operating expenses reflect any charges for premises owned by the Government and occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.

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27. Return on investments is expected to show a small decrease of $2-4 million from the total received in 1949-50. The larger items entering into the estimated total of $89-1 million for 1950-51 are: Interest on advances to the Canadian National Railways, $21-8 million; Bank of Canada profits and dividends, $19-9 million; interest on loans to, and operating profits of, the Foreign Exchange Control Board, $14-8 million; interest on loans to foreign governments under Part II of The Export Credits Insurance Act, $15-5 million; interest on Central Mortgage and Housing debentures, $5-5 million; and interest on advances under the Soldier Settlement and Veterans' Land Acts, $3-7 million.
28.	The estimated total of $18 million credited as premium discount and exchange revenue during 1950-51 may be compared with the charge of $19-7 million included in expenditures in 1949-50. This revenue arises chiefly from the revaluation of sterling and United States' dollar assets and liabilities reflecting the new exchange rates consequent upon the Government's announcement on September 30, 1950, that it did not propose to establish a fixed parity for the Canadian dollar or to prescribe official fixed rates of exchange. The net revenue of $18 million during 1950-51 is due mainly to bookkeeping adjustments totalling $20-7 million reflecting decreases of $18-8 million in net indebtedness payable in United States dollars (consisting of an exchange credit of $29-1 million on matured and unmatured funded debt less a debit of $10-3 million on cash held in New York) and $1 [DOT] 9 million in net indebtedness payable in sterling (consisting of an exchange credit of $2-9 million on unmatured funded debt less a debit of $1 million on cash and securities held in London). The total revenue of $20-7 million due to currency revaluations was offset by disbursements totalling $2 [DOT] 7 million representing exchange losses due to the purchases and sales of gold, sterling and United States dollars.
Special Receipts and Credits
29.	The total of special receipts and credits for the fiscal year 1950-51 is estimated at $92-6 million as compared with total receipts of $51-4 million for the preceding year. The following table presents a comparative summary of the principal sources of special receipts and other credits for the last two years:
-	Fiscal ye Mar 1951 (Estimated)	'ar ended sh 31 1950	Increase or Decrease (-)War and demobilization receipts	
Sale of surplus Crown assets	(In mi 45-2 20-4 25-0 1-4 0-6	lions of doll: 34-8 16-3 0'3	irs) 10-4 4-1 250 1-4 0-3Refundable portion of excess profits tax-transfer to revenue of excess reserve set up in previous years	
Repayment by Canadian Pacific Railway of loan made under Relief Acts (classified as non-active)	
Sundry special receipts and credits	92-6	51-4	41-2
The Budget-Appendix
30.	War and demobilization receipts constituted the largest source of special revenues, the estimated total of $45-2 million received during 1950-51 being $10-4 million more than the total for the preceding year. The following summary gives an estimate of the principal receipts under this heading during 1950-51:
(In millions of dollars)
Refunds in connection with cost audits and re-negotiation of war contracts....	$3-7
Amount received from Central Mortgage and Housing Corporation representing surplus funds in excess of $5 million reserve established by the Corporation
and proceeds of sale of Wartime Housing properties	 7*4
Receipts from foreign governments in respect of military relief claims and cunency
credits arising from war settlements	 9*1
Balance of Canadian Sugar Stabilization Corporation's price stabilization contingency reserve transferred to revenue	 18-7
Estimated surplus of Canadian Arsenals Limited	 1*7
Miscellaneous receipts	 4-6
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31.	The amount of $20-4 million realized from the disposal of surplus Crown assets represents the estimated receipts during the fiscal year from Crown Assets Disposal Corporation after allowing for transfers to active assets of amounts applicable to "Balances receivable under agreements of sale of Crown assets". It does not include the residual cash balances or the value of accounts receivable carried by the corporation as at March 31, 1951.
32.	The amount of $25 million represents a transfer to revenue of the amount by which the reserve set up in previous years in respect of the refundable portion of excess profits tax is now estimated to be in excess of requirements.
Comparison of Actual Revenue with Budget Forecast
33.	The total revenues now estimated for the year 1950-51 will be about $436 million more than the forecast of revenues made in the budget speech of September 7, 1950.
34.	The revenues from customs import duties, the sales tax, and other excise taxes, proved much more buoyant than expected last September as prices continued to rise here and in the United States and the level of production in many lines reached new records.
35.	The steadily rising level of salaries and wages and continued full employment brought the revenue from the personal income tax well above anything which could be foreseen seven months ago.
36.	Rising prices, production at almost full capacity, and the coming into operation of new plant and equipment reflecting the large capital investment during recent years brought total corporation profits to a new high in Canada with consequent increases in the revenue from the corporation income tax. In addition the number of private companies which elected to pay the 15 per cent tax and capitalize their undistributed surplus greatly exceeded that expected in September with the result that revenue from this source exceeded that anticipated at the time of the budget in September by a substantial amount.
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37.	Higher dividend payments as a result of increased profits, a relaxation in November, 1950, of the Foreign Exchange Control Board requirements governing the payment of dividends by controlled subsidiaries in Canada to parent companies abroad, and an apparent desire on the part of parent companies in the United States to get profits home before United States tax rates increased resulted in the tax on "Interest, dividends, rents and royalties" yielding $14 million more than was expected last September.
38.	The excess of non-tax revenue receipts over the budget forecast is due largely to the amount of $18 million for "Premium, discount and exchange" arising out of the revaluation of the Government's assets and liabilities payable in sterling and United States dollars consequent upon the freeing of the exchange rate for the Canadian dollar on September 30, 1950.
39.	Special receipts and credits, which are always difficult to estimate in advance, were increased by the amount of $25 million transferred to revenue during the year which represented an excess provision in prior years for the reserve for refundable excess profits tax. This transfer was not anticipated when the budget was prepared in September.

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(In millions of dollars)
Source of Revenue	Budget Forecast of Revenue (Sept. 7, 1950)	Actual Revenue (Estimated)	Increase or Decrease (-) in Revenue as Compared with Budget Forecast$	$	$245-0	298-0	53-0235-1	245-0	9-9415-0	459-1	44-1205-3	215-9	10-6590-0	652-0	62-0633-5	800-0	166-548-0	62-0	14-010-0	10-030-0	34-0	4-04-0	4-9	0-9
2,405-9	2,780-9 231-8	375-0
	'203-0		28-8
			
	2,608-9 60-0	3,012-7 92-6	403-8
			32-6
			
	2,668-9	3,105-3	436-4
			
B. Analysis of Expenditures
40.	It has been customary to present in summary form a comparison of expenditures by major classifications for the current fiscal year with those of the previous fiscal year. However, due to the elimination of the category "demobilization and reconversion expenditures" in 1950-51, many payments, which were included under this heading in 1949-50, have been classed as "ordinary expenditures" in the year under review. Consequently, to compare

The Budget-Appendix
satisfactorily the expenditures of the several departments as between the two years, it is necessary to consider the combined total of "ordinary" and "demobilization and reconversion" expenditures for 1949-50 in relation to the estimated "ordinary" total for 1950-51. The table which follows presents a comparative summary of the expenditures for the past two years on this basis:

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(In millions of dollars)
-	Fiscal Year Ended March 31				Increase or Decrease (-)	
	1951 (Estimated)		1950			
	Amount	Per cent	Amount	Per cent	Amount	Per cent
Ordinary for 1950-51 and Ordin-						
ary and Demobilization and						
Reconversion for 1949-50						
National Defence-						
Army, Navy and Air Services		536-3	18-5	348-0	14-2	188-3	54-1
Defence Research and Develop-						
ment	23-9	0-8	22-4	0-9	1-5	6-7Pensions-Militia Pensions Act. ..	5-0	0-2	5-0	0-2	Government's contribution to	Permanent Forces Pension Fund	12-0	0-4	9-0	0-4	3-0	33-3Defence Appropriation Act 1950,	Sec. 3	195-4	6*7	195-4	Sundry services	0-3	-0-2	-40-0
772-9	26-6	384-9	15-7	388-0	100-8
Public Debt Charges-						
Interest on Public Debt	425-2	14-6	439-8	18-0	-14-6	-3-3Other Debt Charges	13-8	0-5	11-0	0-4	2-8	25-5439-0	15-1	450-8	18-4	-11-8	-2-6Subsidies and Compensation to	Provinces (including Transit-	ional Grant to Newfoundland).	123-9	4-3	103-9	4-2	20-0	19-2Family Allowances	309-5	10-7	297-5	12-2	12-0	4-0Old Age Pensions and Pensions to	Blind Persons	103-2	3-6	93-2	3-8	10-0	10-7Government's contribution to Super-	annuation Account	81-9	2-8	5-5	0-2	76-4	1,389-[DOT]Unemplovment Insurance Act-	Administration and Government's	Contribution	53-5	1-8	45-1	1-8	8-4	18-6Premium, Discount and Exchange..	19-7	0-8	-19-7	Agriculture	49-6	1-7	47-5	1-9	2-1	4-4Citizenship and Immigration	21-4	0-7	17-7	0-7	3-7	20-9Mines and Technical Surveys	18-0	0-6	23-6	1-0	-5-6	-23-7National Revenue	49-6	1-7	50-6	2-1	-1-0	-2-0Post Office	92-1	3-2	82-6	3-4	9-5	11-5Public Works	72-5	2-5	67-1	2-7	5-4	8-0Resources and Development	34-4	1-2	25-4	1-0	9-0	35-4Trade and Commerce	41-4	1-4	41-2	1-7	0-2	0-5Transport	63-6	2-2	52-5	2-2	1M	21-1Veterans Affairs	180-8	6-2	180-7	7-4	0-1	0-1Post Discharge Rehabilitation	Benefits	12-9	0-5	25-1	1-0	-12-2	-48-6War Service Gratuities and Re-	establishment Credits	16-0	0-6	22-5	0-9	-6-5	-28-9Other Departments	144-8	5-0	132-8	5-5	12-0	9-0Total	2,681-0	92-4	2,169-9	88-6	511-1	23-6Capital Expenditure	16-5	0-6	22-9	0-9	-6-4	-27-9Special Expenditure	113-7	3-9	37-9	1-6	75-8	200-0Government Owned Enterprises	8-4	0-3	52-4	21	-44-0	-84-0Other Charges	82-3	2-8	165-5	6-8	-83-2	-50-3Grand Total	2,901-8	100-0	2,448-6	100-0	453-2	18-5
The Budget-Appendix
National Defence
41.	National defence expenditures, which are estimated at $772-9 million for 1950-51 constitute the largest class of government expenditures, representing 26-6 per cent of the over-all total for the fiscal year. This total, representing an increase of $388 [DOT] 0 million, is more than double the total of $384 [DOT] 9 million spent on national defence in 1949-50. The following table shows a comparative summary of the expenditures on national defence for the last two years:
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1951 (Estimated)	1950	
			
Army, Navy and Air Services	
Defence Research and Development	
Defence Appropriation Act, 1950, sec. 3	
Pensions-Militia Pensions Act	
Government's contribution to the Permanent Forces Pension
Fund	
Sundry Services	
(In millions of dollars)
536-3	348-0	188-323-9	22-4	1-5195-4	195-45-0	5-0	12-0	9-0	3-00-3	0* *5	-0-2772-9	384-9	388-042.	Expenditures for Army, Navy and Air Services are expected to show an increase of $188-3 million, the total for 1950-51 being estimated at $536-3 million. Of this total, $47-8 million represents payments to Central Mortgage and Housing Corporation for housing accommodation for married quarters for service personnel, etc., taken over by the department during the year. A like item of $0-6 million is included in the total of $23-9 million for defence research


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[DOT] 553J
263.1
55.9
36.1
133.2
[DOT] 2j448.6
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ia%
IO%
[DOT]%


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VETERANS? AFFAIRS


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13V.
# C3TIMATC

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and development. The amount of $195-4 million shown under "Defence Appropriation Act, 1950, sec. 3," represents the value of defence equipment and supplies transferred to parties to the North Atlantic Treaty. Under the provisions of this section, an amount equal to the estimated present value of the equipment and supplies so transferred was paid into a special account, to be available subsequently for the purchase of equipment or supplies for the naval, army or air services of the Canadian Forces.
Public Debt Charges
43.	Public debt charges constituted the second largest single item of government expenditure in 1950-51 comprising 15-1 per cent of the over-all total, but due to a substantial decrease in interest on public debt the total of $439 million was $11-8 million less than the corresponding amount for the previous year. Interest on public debt amounted to $425-2 million, the decrease of $14-6 million from the total for 1949-50 being attributable primarily to a reduction in the outstanding unmatured funded debt. A reduction of $18-7 million in the payment of interest on the outstanding funded debt, of which $16-3 million was on debt payable in Canada, was offset by an increase of $4-1 million in interest paid or credited to various annuity, insurance, superannuation, deposit and trust accounts.
44.	Other public debt charges including the annual charges for the amortization of loan discounts, premiums and commissions, the costs of new loan flotations (not amortized), and certain miscellaneous charges for debt servicing amounted to $13-8 million as compared with $11 million for the previous year and brought the total of all debt charges for the year to $439 million.
45.	The following table presents a summary of public debt charges for 1950-51 and the corresponding figures for the preceding year.
	Fiscal Year Ended March 31		Increase or Decrease (-)
	1951 (Estimated)	1950	
	(In millions of doll		ars)
Interest on Public Debt-			
Funded Debt and Treasury Bills-			
Payable in Canada	377-8	394-1	-16-3Payable in London	1-8	2-2	-0-4Payable in New York	10-3	12-3	-2-0389-9	408-6	-18-7Deposit and Trust Accounts	2-8	2-4	0-4Insurance Pension and Guaranty Accounts	32-5	28-8	3-7Total Interest on Public Debt	425-2	439-8	-14-6Annual Amortization of bond discounts and commissions....	12-5	9-7	2-8Servicing of public debt	0-4	0-5	-0-1Cost of loan flotations	0-9	0-8	0-1Total Public Debt Charges	439-0	450-8	-11-8
The Budget-Appendix
Subsidies and Tax Rental Payments to Provinces
46.	Payments to provinces during 1950-51 for statutory subsidies, the transitional grant to Newfoundland, rentals under the Tax Rental Agreements, and the transfer of certain public utility tax receipts, amounted to $123-9 million as compared with $103-9 million in 1949-50. A comparative summary of the payments for the two years is given in the following table:
-	Fiscal ye Mar 1951 (Estimated)	ar ended 3h 31 1950	Increase or Decrease (-)(In n 18-7 6-5 94-1 4-6	nillions of do 19-2 6-5 76-9 1-4	lars) -0-4 17-2 3-2Transitional grant to Newfoundland	
Rentals under Tax Rental Agreements	
Transfer of certain public utility tax receipts (sec. 7, Chap. 58,	
123-9	103-9	20-0
47.	The net increase of $20 million was the result of several factors. The estimated increase of $17 -2 million in payments under the tax rental agreements was due in part to an increase of $14-3 million reflecting the appropriate adjustment in the relevant ratios of population and estimates of gross national product on which the payments are based. Under the provisions of the Dominion-Provincial Tax Rental Agreements Act the Government of Canada collects provincial 5 per cent corporation taxes for the seven provinces participating in the 1947 agreements. Although levied by the provinces, these taxes are administered and collected by the Government of Canada and the proceeds thereof, when finally assessed, are paid to the provinces in lieu of an equivalent (or approximately equivalent) portion of the stipulated tax rental. As payments during 1950-51 were $2-9 million less than those during 1949-50, tax rentals payments were increased by a corresponding amount. There was also an increase of $3-2 million in payments of public utility tax receipts. Section 7 of the Dominion-Provincial Tax Rental Agreements Act authorizes the payment to the provinces of a portion of the taxes collected from corporations, whose main business was the distribution to, or the generation for the distribution to, the public of electrical energy, gas or steam.
48.	A summary of payments, by provinces, during 1950-51 is given in the following table:
-	Statu- tory Sub- sidies	Rentals under Tax Rental Agree- ments	Transfer of certain public utility tax receipts	Transi- tional Grant	Total1-5	(In m 7-2	illions of d( (>) 0-2	dlars) 6-5	15*22-0	11-4	13-60-7	2-0	0) 0-3	2-71*6	101	12-02-9	0-8	3-73-1	1-2	4-31-7	14-0	0*2	15-92*1	15-4	0) 0-8	17-62-1	14-8	17*71-0	19-2	1-0	21-2
18-7	94-1	4-6	6-5	123-9
C1) Less than $50,000.

The Budget-Appendix
Family Allowances, Old Age Pensions and Pensions to Blind Persons
49.	Payments for family allowances are estimated at $309-5 million for 1950-51, representing approximately 10-7 per cent of the total expenditures for the fiscal year. The estimated increase of $12 million over the preceding year is attributable to the natural increase in population in the eligible age groups.
50.	Expenditures for old age pensions are expected to total $99-3 million. The increase of approximately $9 [DOT] 6 million over the total for the previous year is due in part to an increase in the numbers receiving aid and in part to the increase from $30 to $40 per month in the basic rate of pension provided by legislation enacted in April, 1949, the full effects of which were not reflected in the payments for 1949-50. Pensions to the blind are expected to amount to $3-9 million in 1950-51, an increase of $0-4 million over the payments for the previous year.
51.	The estimated distribution of these payments, by provinces, is shown in the following table:
Family
Allowances
Federal Contributions to
Old Age Pensions
Pensions to the Blind
(In millions of dollars)
Newfoundland	10-2	3-8	0-115-7	6-6	0-3Prince Edward Island	2-4	1-0	o)New Brunswick	13-8	5-4	0-499-6	24-5	1-489-0	30-0	0-916-2	6-0	0-2Saskatchewan	19-2	5-8	0-220-8	5-8	0-2British Columbia	22-0	10-3	0-2Northwest and Yukon Territories	0-6	0-1	(*)309-5	99-3	3-9
0) Less than $50,000.
Unemployment Insurance Act Administration and Government's Contribution
52.	Expenditures in connection with the Unemployment Insurance Act (excluding the Government's payments as employer) are estimated at $53-5 million for the fiscal year, an increase of $8-4 million over the total of $45-1 million for 1949-50. Unemployment Insurance benefit payments are not charged directly to budgetary expenditures, but to the Unemployment Insurance Fund, which is financed by contributions from employers and employees, by interest earned on investments, and by the Government's contribution of an amount equal to one-fifth of the combined employer-employee payments. In addition, the Government assumes the costs of administration and pursuant to the Terms of Union with Newfoundland, the cost of unemployment benefits to certain residents of that province. It also reimburses the Fund for certain supplementary benefits paid under section 87F (1) of the Act. The Government's contribution during 1950-51 is estimated at $26-1 million, an increase of S5-0 million over that for the previous year and costs of administration are estimated at $22-4 million, as compared with $20 [DOT] 4 million in 1949-50. Payments of unemployment benefits to residents of Newfoundland are expected to amount to $3-2 million, a decrease of $0-4 million as compared with the total of $3-6 million paid in 1949-50. Supplementary benefits under section 87F (1) of the Act are estimated at $1-8 million for the fiscal year.
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The Budget-Appendix
Government Contributions to the Civil Service Superannuation Account
53.	An amount of $75 million was transferred to the Civil Service Superannuation Account during the fiscal year as a special Government contribution of a portion of the amount by which the liabilities as estimated by the actuaries exceed the balance in the account. This special contribution is in respect of a substantial deficiency which has accumulated in the account over many years due for the most part to increases in the general level of salaries and to the practice heretofore followed of not matching employees' prior service contributions with an equal Government contribution. It is in addition to the transfer to the account of $6-9 million representing the Government's annual contribution of an amount equal to the estimated current payments of individual contributors in the previous fiscal year.
Veterans Affairs
54.	Ordinary expenditures of the Department of Veterans Affairs are estimated at $209-7 million for 1950-51, a decrease of $18-6 million as compared with the combined total of $228-3 million for "ordinary" and "demobilization and reconversion" expenditures for the previous fiscal year. The table which follows presents a comparative summary of the expenditures for the last two years:
	Fiscal year ended March 31		Increase or Decrease
	1951	1950	
	(Estimated)		<-)
(In millions of dollars)
Pensions (World Wars I and II and Northwest Rebellion 1885)..
Treatment and after care of returned soldiers and allowances to veterans and dependents	
War service gratuities and reestablishment credits	
Postedischarge rehabilitation benefits	
Soldier Settlement and Veterans' Land Acts	
Hospital accommodation and facilities	
Departmental administration and sundry	
96-3	96-1	0-273-1	69-8	3-816-0	22-5	-6-i12-9	25-1	-12-26-4	7-4	-1-02-7	3-8	-1-12-1	3-6	-1-5209-7	228-3	-18-655.	The net decrease of $18-6 million is attributable chiefly to decreases of $12-2 million in post-discharge rehabilitation benefit payments and $6-5 million in war service gratuities and re-establishment credits. An estimated increase of $3 [DOT] 3 million in treatment and after care of soldiers and allowances to dependents is offset by approximately equivalent reductions in expenditures under the Soldier Settlement and Veterans' Land Acts, and for hospital accommodation and facilities, departmental administration and sundry services.

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56.	Expenditures charged to capital account are estimated at $16-5 million for the fiscal year as compared with a total of $22-9 million for the previous fiscal year. The principal items in this category are the costs of constructing and improving civil airways and airports, the costs of dredging the St. Lawrence ship channel, and expenditures for the enlargement of dock and terminal facilities at North Sydney, N.S., and for the reconditioning, outfitting and transporting to their operating base of vessels for Pacific Ocean weather station service.

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57.	Special expenditures are estimated at $113-7 million for the fiscal year, an increase of $75-8 million compared with the total of $37-9 million for 1949-50. There were increases of $63 million in payments to the Canadian Wheat Board, $12-1 million in emergency grants and expenditures in connection with flood and fire disasters, $9 [DOT] 6 million in expenditures on agricultural and other projects, and $0 [DOT] 9 million in payments to certain Crown Corporations for reimbursement of the costs of services rendered by them in purchasing materials and procuring the construction of defence projects for the Department of National Defence. These increases, however, were partially offset by a decrease of $9-9 million in advances to the Prairie Farm Emergency Fund under the Prairie Farm Assistance Act, 1939.
58.	The following table presents a comparative summary of special expenditures for the last two years.
		Fiscal Year Ended March 31		Increase or
1951 (Estimated)	1950	Decrease (-)(In ir 24-4	illions of dol 14-8	ars) 9-6Prairie Farm Assistance Act, 1939-	0-4	0-4	Advances to Prairie Farm Emergency Fund	3-2	13-1	-9-9Canadian Wheat Board- Deficits in 1947 crop account, Flax Division	0-2	-0-2Deficits in 1948 crop account, Flax Division	2-5	3-9	-1-4Deficits in 1948 crop, rapeseed account	0-4	-0-465-0	65-0Reimbursement for expenses incurred in the administration of	0-1	0-1	Emergency Grants and Expenditures- Canada's share of the cost of repairing and reconstructing dykes,	4-0	-4-0Canada's share of the cost of planning and constructing emergency works to safeguard against the danger of floods in the Red River Valley	2-4	2-4Grant to assist the Province of Manitoba re Red River Floods, 1950	12-5	12-5Grant to assist the Province of Quebec re Rimouski fire, 1950... Grant to assist the Province of Quebec re Cabano fire, 1950	
Reimbursement to Canadian Commercial Corporation for expenses in purchasing materials, etc., on behalf of Department of	1-0	1-00-2	0-21-4	1-0	0-4Expenses incurred by Defence Construction Ltd., in procuring the construction of defence projects on behalf of Department of	0-5	0-5
113-7	37-9	75-8
			
59.	The amount of $65 million represents the amount authorized to be paid to the Canadian Wheat Board to be added to the amount available for distribution in settlement of the 1945-50 wheat pool to holders of participation certificates.
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The Budget-Appendix

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60.	Expenditures under this heading consist of the operating deficits of and non-active loans to certain wholly owned governmental enterprises which were established prior to World War II. The following table presents a comparative summary of the expenditures under this category for the last two years:
-	Fiscal Ye Mar 1951 (Estimated)	ar Ended ch 31 1950	Increase or Decrease (-)Net Income Deficits- Canadian National Railways	
Canadian National (West Indies) Steamships, Ltd	
Prince Edward Island Car Ferry and Terminals	(In mi 3-3 1-0 1-3 1-3 0-2	llions of doll, 420 0-	5 1-	2 4-3 0-1	irs) -38-7 0-5 0-1 -3-0 01
Loans and Advances, Non-Active-			
	7-1 1-4	48-1 4-2	-41-0 -2-8
Total Government Owned Enterprises				
	8-4	52-4	-44-0
61.	The decrease of $44 million as compared with the previous year is accounted for largely by a decrease of $38 [DOT] 7 million in the deficit of the Canadian National Railways from $42 million for the calendar year 1949 to $3-3 million for the year 1950. The overall C.N.R. deficit includes all interest charges paid on government advances. It should be noted, therefore, that although the charges to the government's expenditures for the fiscal year reflect the absorption of the C.N.R.'s total deficit of $3 [DOT] 3 million, the government's revenues for the year also include under "Return on Investments" an amount of $21 [DOT] 8 million received from the railways for interest on advances.
62.	Other items contributing to the overall reduction include decreases of $3 million in the deficit of Trans-Canada Airlines for the calendar year 1950 as compared with that for 1949, and of $2-8 million in non-active advances to the National Harbours Board.

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63.	The total expenditures for the fiscal year in this category are estimated at $82-3 million, a decrease of $83-2 million, as compared with the corresponding total of $165-5 million for 1949-50. The decrease is attributable to the absence in the accounts for the year under review of any items comparable to the charges in 1949-50 of $62-3 million in connection with the assumption by Canada of part of the Newfoundland debt in accordance with the Terms of Union, and of $21-7 million in connection with the write-down of certain active assets to non-active accounts.
64.	The principal item is again an amount of $75 million transferred to the general reserve for possible losses on the ultimate realization of active assets. This reserve was originally established in 1940-41 and the sum of $25 million was set aside annually from that time up to and including the fiscal year 1946-47. In 1947-48, 1948-49, 1949-50 and again this year the annual provision has been $75 million-the larger amount being deemed advisable to offset the charges that have been made to the reserve during the recent years and to establish the

The Budget-Appendix
reserve at a level more commensurate with the magnitude of the Government's active assets. The reserve now stands at $395-9 million and is equivalent to approximately 7 per cent of the aggregate active assets.
65.	Also included under this classification is the reserve provision of $7-3 million for conditional benefits under the Veterans' Land Act.
4.	THE CASH ACCOUNTS
66.	The full effects of the Government's financial operations are not reflected in the budgetary accounts; cash receipts from and cash payments to the public and the consequent cash surplus or deficit are more significant factors in determining the Government's borrowing program and in assessing the impact of the Government's transactions upon the other sectors of the Canadian economy. However, before proceeding to analyze the cash transactions, two preliminary comments should be made.
67.	In the first place, it should be noted that some of the revenues and expenditures, which are included in the determination of the Government's budgetary surplus or deficit, are merely bookkeeping or accounting entries which do not involve the current receipt or outlay of cash. In the second place, it should be pointed out that the financial operations of the Government are not confined to the collection of revenues or the making of expenditures in the strict or narrow accounting or budgetary meaning of those terms. Large amounts of cash are received and disbursed in connection with extra-budgetary transactions and these receipts and disbursements must be taken into account when measuring the impact of the Government's financial operations upon the economy.
68.	Examples of non-cash budgetary expenditures are the annual provision for the reserve for possible losses on the ultimate realization of active assets, the write-off of a loan or advance where the debt has been cancelled or is no longer collectable, government contributions and interest transferred to deposit and trust and insurance, pension and guaranty accounts, interest accruals on War Savings Certificates, and the amortization of cash outlays made in previous years applicable to the current year (such as payments for premiums, discounts and commissions on loans). Examples of non-cash budgetary revenues are interest accruals added to principal on the consolidation of loans and the transfer to revenue of balances held in deferred credits, deposit or reserve accounts.
69.	The extra-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the Government's assets and liabilities, and they do not, therefore, appear in the Government's "Income" account nor do they enter into the calculation of the annual budgetary surplus or deficit. On the assets side, the transactions relate, for the most part, to advances and repayments of loans and investments to government agencies, foreign, provincial and municipal governments and other borrowers, and to a lesser extent to outlays for the acquisition of inventories of materials which will be used in the future, and for services rendered in one year but applicable to the accounts of subsequent years. On the liabilities side, the transactions relate primarily to the issue and redemption of securities representing the funded debt of Canada, and to receipts and payments in connection with the numerous deposit and trust, and annuity, insurance and pension funds held or administered by the Government.
70.	As explained in the section "Highlights of Governmental Financial Operations During 1950-51", when the Government's budgetary surplus of $203-5 million for the fiscal year was adjusted for non-cash transactions, an amount of approximately $642-3 million remained. This sum, together with $150-2 million received from the repayment of loans, investments and
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working capital advances, net insurance, pension and annuity account contributions and other non-budgetary cash receipts, made $792-5 million available for making loans and investments and other non-budgetary outlay. Necessary loans and investments and other non-budgetary cash disbursements totalling $611-7 million which would otherwise have had to be financed by additional borrowing, were made during the fiscal year out of available cash resources, leaving a cash surplus of $180-8 million available for the reduction of outstanding funded debt.
71.	The following summary, supported by a more detailed statement in the Supplementary Tables appended to this Part, shows an estimate of these non-income transactions, their relationship to the budgetary accounts, and their effect upon the government's net cash position.
(In millions of dollars)
Budgetary Revenues	 $3,105-3
Deduct: Non-cash revenues	 44-0
Net cash budgetary revenues	 $3,061-3
Add: Non-budgetary receipts-
Net annuity, insurance and liability account receipts.	$	82-7
Repayments to government of loans and investments and
working capital advances	 67-5
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 150-2
Cash Receipts (excluding debt transactions)
Budgetary Expenditures	
Deduct: Non-cash expenditures	
Net cash budgetary expenditures	
Add: Non-budgetary disbursements-
Advances to Foreign Exchange Control Board		$475-0
Advances to Central Mortgage and Housing Corporation
(net)	  78-5
Loans to Canadian National Railways	 19-9
Loans to Canadian Farm Loan Board	 2-0
Soldier Settlement and Veterans Land Acts advances..	15-1
Other loans and investments (net)	 3-5
Cost of loan flotations	 10-0
Net disbursements from sundry suspense accounts	 7-7
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Cash Disbursements (excluding debt transactions)	 3,030-7
Cash Surplus available fob debt reduction or increase in
CASH BALANCES	 i 180-8
72.	The figures indicate that after adjusting the budgetary revenues for non-budgetary receipts, a total of $3,211-5 million was available to the Government during the fiscal year. Out of this, budgetary cash expenditures of $2,419-0 million and non-budgetary disbursements of $611-7 million were made, leaving a cash surplus of $180-8 million available for debt reduction or increase in cash balances. The total of non-budgetary receipts is estimated at $150-2 million, made up of $82-7 million for net annuity, insurance and liability account receipts and $67 [DOT] 5 million for repayments of sundry loans and investments, of which $43-8 million was from the United Kingdom and other governments. Non-budgetary disbursements, which amounted to $611-7 million, consisted of $475 million for advances to the Foreign Exchange Control Board, $78-5 million for advances to Central Mortgage and Housing Corporation for housing constructions and housing loans, $19-9 million for advances to the Canadian National Railways, $20-6 million for miscellaneous loans or investments and working capital advances (including $15-1 million for loans to veterans), $10 million for discounts and commissions on loan flotations and $7 [DOT] 7 million for net payments from sundry suspense accounts.

The Budget-Appendix
73.	As a result of total cash receipts exceeding total disbursements by $180 [DOT] 8 million and by letting cash balances run down by $25-4 million, the Government was able to acquire or retire funded debt outstanding in the hands of the public by a net amount of $206-2 million. A reconciliation of the cash surplus of $180-8 million, the reduction in outstanding funded debt, and the net change in the Government's cash position is shown below.
(In millions of dollars)
Cash surplus-or excess of total receipts over disbursements	 $180-8
Net purchases of securities-
For Securities Investment Account	 $5-2
For Sinking Fund Account	 0-8
For Unemployment Insurance Fund	 83-8
.	89-8
Net retirement of funded debt	 116-4
Net decrease in cash balances during the year (excluding blocked currency)		$25-4
5.	ESTIMATED BALANCE SHEET POSITION AT MARCH 31, 1951
74.	The following table presents, in summary form, the Government's estimated balance sheet position at March 31, 1951, with the comparable figures for March 31, 1950.

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(In millions of dollars)
-	Fiscal Year Ended March 31		Increase or Decrease (-)
	1951	1950	
Liabilities Floating debt		$ (Estimated) 498-1 118-0 986-4 11-8 254-7 11-9 27-0 15,027-3	S 505-5 132-7 810-9 11-0 70-8 11-9 19-8 15,188-1	$ -7-4 -14-7 175-5 0-8 183-9
			
Insurance, pension and guaranty accounts				
			
Sundry suspense accounts				
Province debt accounts				
			7-2 -160-8
Funded debt				
Active Assets			
16,935-2	16,750-7	184-51,893-7 1,256-0 2,676-7 2-3 60-0 1-3	1,478-6 1,155-0 2,711-0 2-3 62-5 17-6	415-1 101-0 -34-3
Other loans and investments				
Province debt accounts				
Deferred charges				
			-2-5 -16-3
Sundry suspense accounts				
Total Active Assets				
	5,890-0 395-9	5,427-0 320-9	463-0 -75-0
Less: Reserve for possible losses on ultimate realization of active assets				
Net Active Assets				
	5,494-1	5,106-1	388-0
Net Debt (Excess of liabilities over net active assets)				
	11,441-1	11,644-6	-203-5
			
1886
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75.	The aggregate liabilities of the Government as at March 31, 1951 are estimated at $16,935-2 million, an increase of $184-5 million over the corresponding total at the end of the previous year. Unmatured funded debt outstanding, including bonds, treasury bills, deposit certificates and the estimated refundable portion of excess profits taxes accounts for $15,027-3 million or approximately 89 per cent of all liabilities. Of the total unmatured funded debt now outstanding, only $419-9 million or approximately 2-8 per cent is payable in foreign currencies-$363-7 million payable in United States dollars and $56-2 million in pounds sterling. A complete statement in tabular form of the Government's unmatured funded debt at March 31, 1951, with details of interest rates, dates of maturity, annual interest charges, and amounts of principal outstanding for each loan may be found at the end of this Part.
76.	Floating debt, consisting of outstanding cheques and interest, matured funded debt and similar demand liabilities is estimated at $498-1 million. Amounts at the credit of annuity, insurance, pension and guaranty accounts are expected to total $986-4 million.
77.	The other principal items on the liabilities side of the balance sheet are: sundry suspense accounts (where some uncertainty as to disposition exists), $254-7 million; deposit and trust accounts (consisting of moneys deposited with or held in trust by the Receiver General for various purposes), $118 million; reserve for conditional benefits under the Veterans' Land Act, $27 million; province debt accounts (representing settlements arising out of agreements at the time of confederation), $11-9 million; and deferred credits (consisting of balances whose ultimate accounting treatment is known, but which are held until certain conditions are fulfilled), $11-8 million.
78.	Offsetting these liabilities, and in a measure explaining their existence -as a substantial portion of the total debt is attributable to them-are the Government's active assets. Essentially, these consist of assets that yield interest, profits, or dividends, together with very liquid assets such as cash and departmental working capital funds and certain prepaid expenditures and sundry suspense accounts.
79.	Although some of the items are very difficult to forecast, it is expected that the active assets will aggregate $5,890 million at March 31, 1951. The totals of the principal active asset categories at that date are estimated at: cash and other current assets, $1,893-7 million; loans to, and investments in, Crown agencies, $1,256 million; other loans and investments, (including loans to provincial, municipal, United Kingdom and other governments, subscriptions to international organizations, and a number of miscellaneous advances to veterans and others), $2,676-7 million; deferred charges (discounts and commissions on loan flotations in the process of being amortized over the life of the loans), $60 million; province debt accounts, $2-3 million; and sundry suspense accounts, $1-3 million.
80.	The reserve for possible losses on the ultimate realization of active assets which now stands on the books at $395 [DOT] 9 million is shown on the balance sheet as a deduction from the total of the active assets, bringing the net active asset total to $5,494-1 million.

The Budget-Appendix
A. Analysis of Changes in Principal Liability Classifications During 1950-51
81.	It is estimated that there will be an increase of $184-5 million in the total liabilities during the fiscal year. The two most important increases are $175-5 million in the insurance, pension and guarantee accounts (attributable principally to increases of $66-3 million in the Government Annuities Account, and $85-3 million in the Civil Service Superannuation Account) and $183-9 million in sundry suspense account (due mainly to the undisbursed balance of $175-4 million in the accounts established pursuant to section 3 of the Defence Appropriation Act, 1950, to record the value of defence materials and supplies transferred to members of the North Atlantic Treaty Organization).
82.	The most significant reduction in the liabilities was the substantial decrease in the outstanding unmatured funded debt of the Government from $15,188-1 million at March 31, 1950 to an estimated amount of $15,027-3 million at March 31, 1951. This net reduction of $160-8 million compares with similar reductions of $396-9 million in 1949-50, $372-3 million in 1948-49, and $584-5 million in 1947-48.
Floating Debt
83.	Floating debt shows an estimated decrease of $7-4 million in 1950-51. Decreases of $16-1 million in the Government's liability for matured funded debt payable in Canada and of $2-3 million in interest due and outstanding payable in Canada are offset partially by increases of $6-2 million in outstanding matured funded debt payable in New York and of $4-7 million in the Government's estimated liability for outstanding cheques.
Deposit and Trust Accounts
84.	It is estimated that there will be a decrease of $14-7 million in deposit and trust accounts. A decrease of $17-5 million due to the elimination of the contra account for the Canadian Sugar Stabilization Corporation's price stabilization contingency reserve is offset in part by increases of $2 million in contractors securities cash deposits and of $2 million in the National Capital Fund.
Insurance, Pension and Guaranty Accounts
85.	Insurance, pension and guaranty accounts show an estimated increase of $175-5 million during the fiscal year. Of this total $66-3 million is due to an increase in the Government Annuities Account; $85-3 million to an increase in the Civil Service Superannuation Account (of which $75 million is attributable to the Government's special contribution of a portion of the amount by which the estimated liabilities exceed the balance in the account); $18-3 million to an increase in the Permanent Services Pension Account; and the remainder to lesser increases in various miscellaneous insurance, guaranty, pension and retirement accounts.
Deferred Credits
86.	Deferred credits are expected to show a small increase of $0-8 million during the fiscal year, one of the more important factors contributing to this net increase being additional receipts in connection with military relief and currency settlements.
Sundry Suspense Accounts
87.	Sundry suspense accounts are expected to record an increase of $183-9 million during the fiscal year. Of this total $175-4 million lepresents the undisbursed balance of the credits under section 3 of The Defence Appropriation
80709-120J
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Act, 1950, representing the value of defence materials and supplies transferred to members of the North Atlantic Treaty Organization. Under the terms of The Defence Appropriation Act, 1950, this amount may be used to purchase equipment or supplies for the naval, army or air services of the Canadian Forces. Also recorded under this heading is the Government's liability for collections of provincial 5 per cent corporation income taxes under The Dominion-Provincial Tax Rental Agreements Act. As collections during 1950-51 were higher than during the preceding year, and assessments and payments to the provinces were somewhat less, the estimated amount of $63-7 million at March 31, 1951 was approximately $13 million more than the corresponding amount at March 31,
1950.
Province Debt Accounts
88.	There was no increase or decrease during the fiscal year in the Government's liability in respect of the province debt accounts. These amounts have remained unchanged for many years.
Reserve for Certain Contingent Liabilities
89.	The reserve for certain contingent liabilities is expected to show an increase of $7 [DOT] 2 million during the fiscal year reflecting an additional provision for conditional benefits which may accrue to veteran borrowers under the Veterans' Land Act.
Funded Debt
90.	It is estimated that there will be a net decrease in unmatured funded debt from $15,188 [DOT] 1 million at March 31, 1950 to $15,027 [DOT] 3 million at March 31,
1951.	The over-all reduction of $160-8 million reflects decreases of $81 million in debt payable in Canada, $74-1 million in debt payable in New York, and $5-7 million in debt payable in London. The various loan redemptions, flotations and adjustments which resulted in the net decrease are described in greater detail in the section on "The Public Debt".
B. Analysis of Changes in Principal Active Asset Classifications During 1950-51
91.	It is estimated that there will be an increase of $463-0 million in the total of the active assets during the fiscal year under review. However, with the provision of an additional $75 million for the reserve for possible losses on the ultimate realization of active assets, net active assets are expected to show an increase of $388 million when the books are closed. Estimated increases of $415-1 million in cash and other current assets, and $101 million in loans to, and investments in, Crown agencies are offset by decreases of approximately $34-3 million in other loans and investments, $16-3 million in sundry suspense accounts, and $2-5 million in deferred charges.
92.	The two most significant increases of $475 million in the advances to the Foreign Exchange Control Board, and $78-5 million in the net advances to the Central Mortgage and Housing Corporation, were offset in part by the reduction of $43-8 million in loans to the United Kingdom and other governments, and the decrease of $46-8 million in cash in current and special deposits.
Cash and Other Current Assets
93.	Cash and other current assets increased by approximately $415-1 million during the fiscal year as shown in the following table which summarizes the changes in the various accounts in this category:
APRIL 10, 1951	188S
The Budget-Appendix

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(In millions of dollars)
	Balance at March 31			Increase or Decrease (-)
	1951	1950		
s (Estimated)	S	%Cash in current and special deposits including blocked cur-	96-6	143-4	-46-8Other liquid assets Foreign Exchange Control Board-Advances represented	1,725-0 23-9	1,250-0 18-7	475-05-28-4	8-0	0-4Working Capital Advances	22-0	41-7	-19-717-8	16-8	1-0
1.893-7	1,478-6		415-1
94.	The two principal changes were an increase of $475 million in the advances to the Foreign Exchange Control Board and a decrease of $46-8 million in cash in current and special deposits. The increase of $475 million in advances to the Foreign Exchange Control Board represents additional cash advances during the year to finance the purchase of gold and foreign exchange. Other significant changes were a decrease of $19-7 million in departmental working capital advances (attributable largely to a decrease in advances to the Agricultural Prices Support Account), and an increase of $5-2 million in the bond holdings in the Securities Investment Account.
Loans to, and Investments' n, Crown Agencies.
95.	Loans to, and investments in, Crown agencies increased by $101 million during 1950-51 from $1,155 million at March 31, 1950, to an estimated amount of $1,256 million at March 31, 1951. The changes during the fiscal year in this category of assets are summarized in the following table:

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(In millions of dollars)
	Balance at March 31		Increase or Decrease (-)
	1951	1950	
S	$	%Bank of Canada Capital Stock	(Estimated) 5-9	5-9	Central Mortgage and Housing Corporation-	25-0	25-0	Loans	260-5	182-0	78-5Canadian Farm Loan Board	26-1	24-1	2-0Railway and Steamship Companies	764-0	743-8	20-2National Harbours Board	106-6	105-7	0-9Polymer Corporation Limited	41-0	42-9	-1-9Other Crown Agencies	26-9	25-6	1-31,256-0	1,155-0	101-0
The Budget-Appendix
96.	Loans to railways and steamship companies represent in the main advances by the Government to the Canadian National Railways for capital expenditures (including the purchase of railway equipment), for retirement of maturing debt, and for the temporary financing of current operations. The increase of $20-2 million reflects net advances during the year of $19-9 million to the Canadian National Railways; the remaining $0-3 million represents an advance for working capital to the Canadian National (West Indies) Steamships Limited.
97.	The amount of 1106-6 million shown for the National Harbours Board represents the net outstanding advances in connection with harbour developments at Montreal and Vancouver. These are the only advances to the National Harbours Board which are classified as active assets in the Government's accounts.
98.	The Government's investment in Polymer Corporation Limited, a Crown corporation engaged in the manufacture of synthetic rubber, was reduced by $1 -9 million during the fiscal year, the balance at March 31, 1951, being estimated at $41 million.
99.	The amount of $26 [DOT] 9 million shown for other Crown agencies, represents subscriptions to the capital stock of, or advances to, sundry government agencies for capital, construction and other purposes. The total includes loans to, or investments in, Canadian Broadcasting Corporation ($8-4 million); Canadian Overseas Telecommunications Corporation ($0-6 million); Eldorado Mining and Refining (1944) Limited ($8-2 million); Export Credits Insurance Corporation ($5 million); and Northwest Territories Power Commission ($4-7 million).
Other Loans and Investments.
100.	This group of assets includes loans to the United Kingdom and various foreign governments, the Government's subscriptions to the capital of the International Monetary Fund and the International Bank for Reconstruction and Development, loans to provincial and municipal governments, and a number of miscellaneous loans and investments, the chief of which are the loans to veterans under the Soldier Settlement and Veterans' Land Acts. Details of the loans and investments in this category and changes during the fiscal year are shown in the following table:

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(In millions of dollars)
-	Balance at March 31		Increase or Decrease (-)
	1951	1950	
	$	$	s
	(Estimated)		
Loans to United Kingdom and other Governments		1,984-6	2,028-4	-43-8
	322-5	322-5	
Subscription to Capital of International Bank for Reeon-			
	70-7	70-7	
Loans to Provincial and Municipal Governments	941	98-4	-4-3Advances under Soldier Settlement and Veterans' Land Acts	189-7	174-6	15-1Miscellaneous Loans and Investments	15-1	16-4	-1-32,676-7	2,711-0	-34-3
The Budget-Appendix
101.	The loans to the United Kingdom and other governments consist of loans to the Government of the United Kingdom under the authority of The War Appropriation (United Kingdom Financing) Act, 1942, and The United Kingdom Financial Agreement Act, 1946, loans to other countries under Part II of the Export Credits Insurance Act, and miscellaneous foreign loans. A summary of the changes in each of these categories is shown in the following table:

[Stage Direction]
(In millions of dollars)
* -	Balance at March 31		Increase or Decrease (-)
	1951	1950	
	S	$	$
	(Estimated)		
Loans to United Kingdom			
The War Appropriation (United Kingdom Financing)			
Act, 1942	251-5	292-0	-40-5The United Kingdom Financial Agreement Act, 1946...	1,185-0	[DOT] 1,165-0	20-01,436-5	1,451-0	-20-5Loans to Foreign Governments	The Export Credits Insurance Act, Part II	500-6	523-6	-23-0Miscellaneous Advances	47-5	47-8	-0-3548-1	571-4	-2S-S1,984-6	2,028-4	-43-8102.	It is estimated that during 1950-51 the Government of the United Kingdom will have repaid $40-5 million of the $700 million interest-free loan granted under the provisions of The War Appropriation (United Kingdom Financing) Act, 1942, reducing the balance outstanding of this loan to $251-5 million at March 31, 1951. During the year, however, additional advances of $20 million were made to the United Kingdom Government as part of the $1,250 million loan authorized by The United Kingdom Financial Agreement Act of 1946. On February 20, 1951, the United Kingdom Government announced that no further drawings would be made under the agreement. The total amount advanced now stands at $1,185 million.103.	The advances under Part II of The Export Credits Insurance Act represent loans made to certain foreign countries to assist them in purchasing goods and services in Canada. It is estimated that the total of outstanding advances under this Act will be $500-6 million at March 31, 1951, representing a net decrease of $23 million from the total of $523-6 million outstanding at the end of the previous year. A classification of these advances by recipient governments, showing the repayments during the year, is given in the following table:

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(In millions of dollars)
-	Total Outstanding at March 31, 1950	Repayments during 1950-51	Total Outstanding at March 31, 195162-3	2-3	60-050-2	0-8	49-4Czechoslovakia	16-7	3-4	13-3234-3	8-4	225-915-4	15-4118-1	2-6	115-523-6	2-6	21-02-9	2-9	Nil
523-6	23-0	500-6
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Deferred Charges.
104.	It is estimated that unamortized discounts, premmms, redemption Donuses, and commissions on loans will be reduced by approximately $2-5 million during 1950-51. Discounts and commissions of $10 million on new loans are more than offset by the annual amortization of $12-5 million applicable to 1950-51 and charged to the year's expenditures.
Sundry Suspense Accounts.
105.	The decrease of $16-3 million in this asset classification is due mainly to the elimination of the price stabilization contingency reserve of Canadian Sugar Stabilization Corporation Limited which was transferred to revenue during the fiscal year.
Reserve for Possible Losses on Ultimate Realization of Active Assets.
106.	For the fourth successive year $75 million was added to this reserve with a corresponding amount being shown as an expenditure in the Government's accounts. There was no charge or write-off to the reserve during the fiscal year, the balance at March 31, 1951, being $395-9 million.
C.	Decrease in Net Debt
107.	The estimated surplus of $203-5 million for the fiscal year will result in a corresponding decrease in the net debt of Canada, reducing it from $11,644-6 million at March 31, 1950, to $11,441-1 million at March 31, 1951.

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6.	THE PUBLIC DEBT
Gross and Net Debt
108.	The unmatured funded debt of Canada was reduced by $160-8 million during the fiscal year, of which $116-4 million represented cash retirements and $44-4 million revaluations and adjustments. However, due to increases of $345-3 million in other liabilities-principally in insurance, pension and guaranty and sundry suspense accounts-the gross public debt of Canada increased by $184-5 million from $16,750-7 million at March 31, 1950 to an estimated total of $16,935-2 million at March 31, 1951. During the same period, the net active assets increased by $388 million, with the result that the net debt- which is the gross debt less the active or revenue producing assets-was reduced by $203-5 million.
109.	The following table shows the amount of net debt as at March 31, 1939 to March 31, 1951 inclusive, with the amount of annual increase or decrease.
NET DEBT (In millions of dollars)
Fiscal Year Ended March 31	Balance at end of year	Increase or Decrease (-) during fiscal year
1939		3,152-6 3,271-3 3,648-7 4,045-2 6,182-8 8,740-1 11,298-4	
1940			118-7
1941			377-4
1942		 1943		 1944				396-5 2,137-6 2.557-	2 2.558-	3 2,123-0 -373-6
1945			
1946		13,421-4 13.047-8	
1947			
1948		12,371-6 11,776-1 11,644-6 11,441-1	-67G-1
1949			-595-5
1950			-131-5
1951			-203-5
		
Unmatured Funded Debt
110.	The estimated total unmatured funded debt of Canada outstanding at March 31, 1951 was $15,027-3 million. This was $160-8 million less than at the end of the previous year and $1,779-9 million less than that at March 31, 1946.
Summary of Security Issues and Redemptions During the Year
111.	Funded debt payable in Canada was reduced by $81 million from $14,688-5 million at March 31, 1950 to $14,007-4 million at March 31, 1951. Government obligations payable in Canadian dollars matured or were called for redemption during the fiscal year in the amount of $3,770-8 million. The financing of these retirements was effected as follows:
(In millions of dollars)
By refunding or conversion into new issues	S 3,245-0
By proceeds of new borrowings:
Sale of Canada Savings Bonds Series V (net)	 267-2
Sale of Deposit Certificates (part)	 200-0
From available cash	 58-6

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112.	The retirement of $58-6 million out of available cash and the transfer of $25 million to revenue of the excess provision for the reserve for the refundable portion of excess profits tax, less $2-6 million of accrued interest which was added to the principal of War Savings Certificates during the fiscal year, accounts for the net reduction of $81 million in funded debt payable in Canadian dollars.
113.	Funded debt payable in United States funds decreased by $74-1 million in the fiscal year. Of this amount, $55 million ($50 million U.S.) resulted from the redemption on October 1,1950, of $100 million (U.S.) 4 per cent bonds which were refunded in part by an issue of $50 million (U.S.) twenty-five year 2% per cent bonds dated September 15, 1950. This issue was sold in New York at a cost of 2% per cent to the Government. In addition, the Canadian dollar value of funded debt payable in United States dollars was reduced by $19-1 million due to the change in the exchange rate resulting from the freeing of the Canadian dollar in September, 1950.
114.	Funded debt payable in pounds sterling decreased during the fiscal year by $5 [DOT] 7 million. This was due to the redemption of $2-9 million registered stock on May 1, 1950 and $2-8 million arising out of the reduction in the Government's liability expressed in Canadian dollars for outstanding sterling issues consequent upon the change in the exchange rate following the freeing of the Canadian dollar in September 1950.

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115.	From the above analysis it will be seen that the over-all reduction of $160-8 million in the Government's outstanding debt arose from cash payments of $116-4 million and of revaluations and adjustments totalling $44-4 million.
116.	The average coupon rate on the Government's outstanding funded debt at the close of the current fiscal year is estimated at 2 [DOT] 60 per cent unchanged from the previous fiscal year end.
117.	More complete details of redemptions and new issues of securities during the fiscal year are set out in the following tables.


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Maturity or Call Date	Interest Rate	Where Payable	Amount	
	%			$
May 1, 1950		a	Canada London Canada Canada Canada Canada Canada Canada New York Canada Canada Canada		200,000,000 2,930,122 40.000.	000 55.000.	000 649,969,592 33,293,471 100,000,000 550.000.	000 100.000.	000 200,000,000 335,690,000 400.000.	000 50,163,125 300.000.	000 550.000.	000 40,923,367 197,843,350 147,376
	31 3			
				
	3			
	3			
	4			
	1			
				
	4			
				
	u « 31 i 1 3			
				
February 1, 1951					
February 28			Canada Canada Canada		
				
			(*)	
Canada Savings Bonds, Series I, II, III, and IV		2J			
		Canada		
				
Total Bonds and Certificates					3,805,960,403 67,809,083
Repayment of Refundable Portion of Excess Profits Tax				(«)	
				
Total Redemption of Debt				3,873,769,486	
				
(') This is the amount of War Savings Certificates redeemed during the fiscal year. Accrued interest of $2.6 million was added to principal.
(2) Not including $25 million excess provision transferred to revenue.
80709-121J

[Stage Direction]
Payable in Canada
Issued o Chartered Banks-
Deposit Certificates	
Deposit Certificates	
Issued to B nk of Canada-
Six Months Treasury Notes Six Months Treasury Notes Six Months Treasury Notes Six Months Treasury Notes
issued to General Public-
Refunding Loan, 1950 (*)	
Refunding Loan, 1950 (*)	
Two Year Bonds D)	
Five Year Eight Months Bonds (*)___
Canada Savings Bonds Series V, Net..
Payable in United States
Issued to General Public..
Grand Total	
Issue Date	Maturity Date	Interest Rate	Price to Government	Yield at Price to Government	Total Amount Issued	Renewals or Reconversion Included in Amount Issued	Amount Issued for Cash%	%	$	$	iAug. 30, 1950	Feb. 28, 1951	1	100-00	0-875	300,000,000	100,000,000	200,000,000Feb. 28, 1951	Aug. 29, 1951	1	100-00	1 00	200,000,000	200,000,000	500,000,000	300,000,000	200,000,000May 1, 1950	Nov. 1, 1950	1	100-00	0-75	200,000,000	200,000,000	Sept. 1, 1950	Mar. 1, 1951	i	100-00	0-75	550,000,000	550,000,000	Nov. 1, 1950	May 1, 1951	i	100 00	0-875	200,000,000	200,000,000	Mar. 1, 1951	Sept. 1, 1951	l	100-00	1 00	550,000,000	550,000,000	1,500,000,000	1,500,000,000	June 15, 1950	Dee. 15, 1954	2	99-65	2-07	395,000,000	30 467June 15, 1950	June 15, 1968	2!	99-00	2-82	350,000,000	Nov. 1, 1950	Nov. 1, 1952	If	99-55	1-99	300,000,000	300,000,000	Nov. 1, 1950	July 1, 1956	2f	99-125	2-39	400,000,000	400,000,000	Nov. 1, 1950	Nov. 1, 1960	21	99-375	2-82	207,215,000	267,215,0001,712,215,000	1,444,969,592	267,245,407Sept. 15, 1950	Sept. 15, 1975	2,	100-00	2-75	(*) 55,000,000	(*) 55,000,000	3,767,215,000	3,299,969,592	467,245,407
0 ) A portion of these issues was purchased by the Bank of Canada and the chartered banks. (2) $50,000,000 par value in United States funds.
1896	HOUSE OF COMMONS
The Budget-Appendix
APRIL IQ. 1951	1897
The Budget-Appendix
Indirect or Contingent Liabilities
118.	It should be noted that the Government has assumed certain indirect or contingent liabilities which are in addition to the direct debt set out in the balance sheet. Included under this heading, for example, are the Government's guarantees of certain securities issued by various Government owned enterprises such as the Canadian National Railways, the Canadian National (West Indies) Steamships Limited, and the Saint John Harbour Commission; the guarantee of deposits maintained by the chartered banks in the Bank of Canada; guarantees of certain loans made by chartered banks to veterans or farmers for certain authorized purposes; guarantees under the Export Credits Insurance Act; and certain commitments under housing legislation.
119.	The following table gives details of the bonds and debenture stocks guaranteed by the Government, and also indicates the nature and approximate extent of the Government's other guarantees and contingent liabilities.

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Date of Maturity	Issue	Interest Rate	Estimated Amount Outstanding
		%	$
Sept. 1, 1951..	Canadian National	41	48,022,000Aug. 1,1952..	Saint John Harbour Commissioners	5	667,953Julv 10, 1953. .	Canadian Northern	3	1,162,768Feb. 1,1954.. May 1,1954..	Canadian National	
City of Saint John Debentures assumed by Saint John Har-	5	50,000,000bour Commissioners	5i	3,329Mar. 1, 1955. .	Canadian National (West Indies) Steamships Limited	5	9,400,000June 15, 1955. .	Canadian National	4,	48,496,000Feb. 1, 1956..	Canadian National	4J	67,368,000July 1, 1957..	Canadian National	4f	64,136,000July 20.195S..	Canadian Northern	3J	5,636,507Jan. 15,1959..	Canadian National	3	35,000,000May 4, 1960..	Canadian Northern Alberta	31	550,727May 19, 1961 .	Canadian Northern Ontario	31	3,597,518Jan. 1,1962..	Grand Trunk Pacific	3	26,465,130Jan. 1,1962..	Grand Trunk Pacific	4	7,999,074Jan. 3, 1966. .	Canadian National	3	35,000,000Jan. 2, 1967..	Canadian National	21	50,000,000Sept. 15, 1969..	Canadian National	21	70,000,000Jan. 16,1971..	Canadian National	2g	40,000,000June 15, 1975..	Canadian National	21	6,000,0005	1,016,092 499,709 5,446,491 22,591 576,489,8895	4	Perpetual	Northern Railway of Canada Debenture Stock	4	
The Budget-Appendix
Other Outstanding Guarantees and Contingent Liabilities
Estimated
Amount
Outstanding
Deposits maintained by the chartered banks in the
Bank of Canada (March 31, 1951)	$	552,915,324
Bank advances, re Province of Manitoba Savings Office
(March 31, 1951)	 3,440,078
Province of Manitoba Treasury Bill (March 31, 1951).	1,750,000
Loans made by chartered banks under the Farm
Improvement Loans Act, 1944 (Dec. 31, 1950)...	16,985,809
Loans made by chartered banks under the Veterans'
Business and Professional Loans Act (Dec.31,1950)	1,866,456
Guaranteed Bank Loans-Acadia Coal Company
(March 27, 1951)	 292,000
Guarantees under Part II of The Export Credits Insurance Act (March 31, 1951)	 12,750,000
Loans made by approved lending institutions under
Dominion and National	Housing Acts	 Indeterminate
Guarantees of land assembly projects under National
Housing Act (Dec. 31,	1950)	 520,534
120.	It will be noted that the total of guaranteed bonds and debentures outstanding at March 31, 1951, is estimated at $576-5 million, an increase of approximately $6 million over the amount outstanding at March 31, 1950. This increase resulted from an issue of 16 million Canadian National Railway Company 2% per cent twenty-five year bonds dated June 15, 1950, guaranteed by the Government of Canada.

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Loans and Advances and Investments Sources and Disposition of Cash Funds Unmatured Funded Debt
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (thousands of dollars)
-	1946-47	1947-48	1948-49	1949-50	Estimated 1950-51$	$	$	i	$Tax Revenue-	Direct Taxes-	Direct Taxes on Incomes-	694,530	659,828	762 564	621,982	652,000Tax on Interest and Dividends....	28,428	33,929	40,965	Taxes on Rents and Royalties	1,708	1,960	2,480	Corporation Income Tax	238,792	364 131	491 990	603 193	800,000Excess Profits Tax	448,698	227,030	44,792	-1,788	10,000Total Direct Taxes on Incomes.	1,412,156	1,286,878	1,342,791	1,270,862	1,524,000Succession Duties	23,576	30,828	25,550	29,920	34,000Total Direct Taxes	1,435 732	1,317,706	1,368,341	1,300 782	1,558,000Indirect Taxes-	Customs Import Duties	237,355	293,012	222,975	225,878	298,000Excise Duties-	Spirits, malt, etc	97,820	97,675	101,105	107,035	132,000Cigars, cigarettes and tobacco....	101,163	102,116	106,241	115,982	116,000Licences	40	37	39	38	40Less refunds	-2,979	-3,034	-2,733	-2,490	-3,040Total Excise Duties	196,044	196,794	204,652	220,565	245,000Excise Taxes-	Taxes on Commodities-	Sales Tax	328,073	383,012	390,174	415,222	471,100War Exchange Tax	338	Automobiles, rubber tires and	tubes	16,340	31,949	36,943	38,193	63,000Beverages	18,635	23,767	27,689	1,627	7,400Candy and chewing gum	13,277	18,279	19,888	1,030	10,400Cigars, cigarettes and tobacco....	76,318	68,606	77,665	83,497	83,200Cigarette papers and tubes	6,943	6,419	6,999	7,223	7,8507	2,824	3,894	2 300Furs	3,102	3; 139	3,693	2,937	4,30cGasoline	36,220	2,208	Matches and lighters	4,088	3,967	3,412	1,091	1,100Phonographs, radios and tubes	2,526	5,325	3,562	3,101	5,200Special excise on importations	1,185	2,113	279	11,339	10,572	Toilet preparations and soaps	7,522	7,146	7,757	4,316	4,300Trunks, bags, luggage, etc	5,710	4,962	5,565	2,257	2,500Wines	2,394	2,342	2,060	2,126	2,2004,077	6,600Sundry	5,109	4,716	4,700	2^310	4,400Taxes on Amusements and Services-	Amusements	14,552	15,369	2,483	Tax on pari-mutuel bets	2,510	2^519	105	Transportation and communication	27,931	271531	29,034	3,967	Stamps, including payment of taxes	on jewellery, chinaware, cabaret	attendance, etc	24,437	24,300	22,725	9,898	10,800Licences.interest and miscellaneous	313	376	382	370	350Less refunds (mainly sales tax)...	-29,845	-10,683	-12,871	-11,785	- 12,000Total Excise Taxes	579,024	640,758	636,138	571,457	675,000Other Taxes-	Chartered bank note circulation	220	188	166	121	Insurance Companies	8,796	3,004	3,339	3,789	4,150Miscellaneous	690	613	531	525	750Total Indirect Taxes	1,022,129	1,134,369	1,067,801	1,022,335	1,222,900Total Revenue from Taxes	2,457,861	2,452,075	2,436,142	2,323,117	2,780,900
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1946-47	1947-48	1948-49	1949-50	Estimated 1950-51$	t	$	t	*Non-Tax Revenue-	72,978 69,439 2,098	77,759 75,800 1,731 3,736 18,745	80,604 107,889 3,253	84,512 91,529 4,523	90,00089il00 4,800 18,000 29,900
16,355		21,202	25,035	
					
	160,870	177,771	212,948	205,599	231,800
					
	2,618,731	2,629 846	2,649,090	2,528,716	3,012,700
					
Special Receipts and Credits- Refunds of previous years' Special	10	7	16	156	300 45,200 20,400 25,000 2Special Receipts-War and Demobili-	228,465 184,298	162,376 63,381	91,281 25,840	34,765 16,351	
Refundable portion of excess profits tax-Transfer to Revenue of excess					
170	138	69	54	Canadian Wheat Board- Surplus in certain special accounts... Investment in Crown plants trans-	1,762	16	121	2,053	3,704	2,528	416,758	229,622	119,855	51,326	90,902Capital and Non-active Accounts- Capital Accounts- Refunds of previous years' ex-	110	61	82	67	120Transfer to Consolidated Deficit	158	2,243	Non-active Accounts- National Harbours Board, reduc-	10	82	12	119Canadian Pacific Railway- Repayment of loan made under	1,4471936 and 1937 Saskatchewan Seed Grain Loans Guarantees- Adjustment pursuant to The Western Provinces Treasury Bills and Natural Resources	9,773	Canadian National (West Indies) Steamships, Limited, reduction	1,105 1,308	256	80	Write-off to Consolidated Deficit Account- Canadian National Railways Securities Trust Stock-reduction due to retirement of equipment during calendar	1,885	Seed Grain and Relief Loans..	54	63	45	20	12Total Capital and Non-active Accounts	2,587	12,278	2,450	99	1,698Total Special Receipts and Credits	419,345	241,900	122,305	51,425	92,6003,038,076 30,200	2,871,746	2,771,395	2,580,141	3,105,300Less estimated amount of refundable Income and Excess Profits Taxes	
Net Total Revenue		3,007,876	2,871,746	2,771,395	2,580,141	3,105,300
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The Budget-Appendix

[Stage Direction]
(thousands of dollars)
-	1946-47	1947-48	1948-49	1949-50	Estimated 1950-51$	$	t	$	$Ordinary Expenditure	Agriculture	13,300	16,311	20,376	25,296	49,604Auditor General's Office	390	395	533	562	59417,702	21,396Civil Service Commission	593	665	771	1,513	1,587External Affairs	5,128	7,195	8,676	9,721	22,289Finance-	Interest on Public Debt	464,395	455,455	465,138	439,816	425,240Cost of Issuing New Loans and Annual	Amortization of Bond Discounts and	Commissions	12,139	10,914	9,745	10,546	13,368Servicing of Public Debt	678	356	331	478	426Subsidies to Provinces	14,383	33,394	17,095	19,170	18,7356,500	6,500Miscellaneous Grants and Contributions	95	113	147	597	1,332Civil Pensions and Superannuation....	253	224	190	169	147Government's contribution to Superan-	nuation Account	3,161	3,488	4,050	5,461	6,858Special Government contribution to	75,0009,172	111	19,740	Compensation to Provinces-	Tax-rental Agreements	94,380	122,497	84,387	76,881	94,1231,375	4,566Special payments in respect to mat	ters supplementary to Terms of	43	Office of the Comptroller of the	Treasury	7,521	8,933	11,103	11,140	11,353Administrativeand Sundry Expenditure	1,671	2,059	3,193	4,547	6,299Fisheries	3,599	4,097	5,158	6,764	8,006Governor General and Lieutenant-	Governors	252	239	242	274	250Insurance	212	237	263	311	382Justice	3,194	3,917	4,025	4,226	4,704Penitentiaries	3,806	4,564	5,863	6,691	8,200Labour	2,010	2,319	4,712	6,244	8,727Unemployment Insurance Act, 1940-	Administration	7,496	17,641	18,965	20,386	22,418Government's Contribution	15,200	17,500	20,103	21,098	27,930Unemployment assistance to residents	of Newfoundland pursuant to Terms	3,589	3,200Government Annuities-	Payment to maintain reserve	977	332	11,408	1,256	1,500Legislation-	House of Commons	2,786	3,022	2,628	3,764	3,289Library of Parliament	90	103	127	127	138Senate	881	946	736	1,178	976General	167	270	272	160	265Chief Electoral Officer, including	elections	144	151	287	4,456	274Mines and Resources-	173	268	366	Immigration	2,047	2,665	5,564	Indian Affairs	5,948	7,180	10,378	Lands, Parks and Forests	4,962	Lands and Development Services	5,630	11,863	Surveys and Engineering	3,444	Special Projects	2,554	126	1,847	Mines, Forests and Scientific Services	5,318	17,970	22,200	18,046National Defence-	Defence Forces-Army, Navy, and	Air Services	(>) -	(l) -	(l) -	C) -	536,336Defence Research and Development..	(') -	(') -	(') -	(') -	23,915
(*) Included under Demobilization and Reconversion.

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued
(thousands of dollars)
-	1946-47	194748	194849	1949-50	Estimated 1950-51%	$	S	$	$Ordinary Expenditure-Con.	National Defence-Con.	Administration and sundry services...	253	615	1,127	383	343Pensions-Militia Pensions Act	(2) -	(!) -	4,863	5,011	5,000Government's contribution to Perm-	(*) -	7,867	9,046	11,975195,417National Health and Welfare	8,616	10,815	14,381	16,901	17,950Old age pensions, including pensions to	blind persons	35,928	58,090	66,764	93,189	103,250Family allowances	245,141	263,165	270,910	297,514	309,4907,528	15,716	19,300National Revenue (including Income	Tax)	28,551	37,312	49,323	50,604	49,588Post Office	64,213	67,944	77,643	82,640	92,125Prime Minister's Office	88	99	106	120	124Privy Council	808	1,287	4,351	4,008	4,054Public Archives	149	157	173	198	208Public Printing and Stationery	293	536	753	866	726Public Works	26,360	35,545	50,044	67,058	72,5001,932	12,342	3,403	25,014	34,433Dominion Fuel Board administration	1,776	1,143	(3) -	(S) _	Royal Canadian Mounted Police	8,604	10,406	13,717	15,971	19,766Secretary of State	1,157	1,345	1,559	1,600	2,189Trade and Commerce	9,776	10,846	24,778	30,363	37,988Dominion Coal Board administration	2,164	4,357	3,421Mail Subsidies and Steamship Sub-	1,103	(4) -	(4) -	(4) -	Transport-	Administration and general	1,499	1,973	3,492	3,790	2,495Air Service	5,653	10,390	15,932	21,669	25,723Marine Service	5,963	6,831	8,176	9,878	11,588Railways and Canals	3,702	4,073	5,124	6,624	9,191Maritime Freight Rates Act	4,871	5,090	6,606	6,982	8,585Mail Subsidies and Steamship Subven-	tions, including Canadian Maritime	1,764	2,166	2,277	5,975Veterans Affairs-	Departmental Administration	1,680	1,677	2,225	2,248	2,119Pensions (World War 1 and military)..	40,771	41,227	Pensions (World Wars 1 and 2 and gen-	eral)	([DOT]) -	([DOT]) -	102,951	96,091	96,339Treatment and after-care of returned	soldiers and allowances to depend-	ents	44,303	46,286	69,937	69,778	73,139Hospital accommodation and facilities.	(') -	(*) -	C) -	(*) -	2,724Soldier Settlement and Veterans	Land Acts	6,551	8,092	7,885	7,383	6,37312,926War service gratuities and re-establish-	15,993
Total Ordinary Expenditure		1,236,235	1,380,002	1,573,450	1,701,260	2,680,990
Capital Expenditure					
Railways	2,654	3,809	3,239	3,835	1,257Public Works	8,546	11,847	15,234	19,088	15,210Total Capital Expenditure	11,200	15,656	18,473	22,923	16,467
(*) Included under Demobilization and Reconversion.
(!) Included under Veterans Affairs.
(*) See Department of Trade and Commerce.
(*) See Department of Transport.
(l) See War, Demobilization and Reconversion Expenditure.
[Stage Direction]
The Budget-Appendix STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Continued (thousands of dollars)
[Stage Direction]
War, Demobilization and Reconversion Expenditure
National Defence-Army, Navy and Air
Services	
National Defence-Defence Research..
National Defence-
Army Services	
Naval Services	
Air Services	
Reconstruction and Supply (formerly Munitions and Supply)- Administration, reconversion and operation of Crown Companies and/
or Crown Plants	
Administration	
Housing development	
Production and transportation subsidies for Canadian steel producers, etc.... Research and development of jet
engines and aircraft	
Liquidation of contracts	
Termination of contracts	
Other	
Agriculture-
Disposal of agricultural products rendered surplus by the war	
Freight assistance on western feed
grains	
Fertilizer subventions and freight
allowance	
Subsidies and bulk purchasing of
fertilizer	
Subsidy on western wheat used exclusively as feed for live-stock	
Subsidy on milk and milk products. .. Premium on hog carcasses suitable
for export to U.K	
To provide for reserve stocks of feed
grains	
Sundry	
4,090
219,124 64,873 99,271
10,784
4,140
35,323
12,663
24,743
55,200
4,287
147,140
18,828
6,474
36,759
4,506
1,551
1,757
71,116
External Affairs-
Contribution to International Refugee
Organization	
General post UNRRA relief	
Sundry	 837
Finance-
Comptroller of the Treasury	
Wartime Prices and Trade Board-
Administration	
Subsidies due to application of Order
placing a ceiling over all prices.
Advances for payment of drawback claims to millers and other manufacturers of wheat products	
Halifax V-E Day disorders and explosion-
Payment of claims	
Expenses of investigations	
Sundry	
6,072
12,738
88,778
26,000
2,127
999
136,876
1947-48	1948-49	1949-50	Estimated 1950-51S	%	S	$189,seo	238,916	348,050	6,024	16,033	22,389	
1,558	(«) -		
1,305	122		
38,558	1,013		
7,950	(') -	(*) -	4,500	(') -	(«) -	1,007	Gi 400	1,056	242	62,334	1,377	7	20,092	18,154	16,764	597	4,421	1,861	5,474	4,585	4,982	434	347	439	465	S3,2,3	23,178	22,211	5,468	5,412	5,827	16,927	325	5	102	1,132	22,400	6,839	6,959	1,702	(7) -	(') -	5,794	3,321	2,567	34,341	14,911	17,000	11,000	400	363	1,457	92	69,200	30,689	3,059	
* Included in Ordinary Expenditure in 1950-51.
(6)	See Department of Trade and Commerce.
(7)	Included in ordinary expenditure.

The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(thousands of dollars)
-	1946-47	1947-48	1948-49	1949-50	Estimated 1950-51$	$	$	$	sWar, Demobilization and	Reconversion Expenditure-Con.	Labour-	11,230	Removal of enemy aliens from pro-	3,161	Vocational training for discharged	members of Canada's Armed Forces	13,049	6,405	3,472	2,164	Vocational Schools - Payments to	Provinces	2,442	3,264	(*) -	(8) _	Sundry	2.772	1,723	1,767	1,406	32,654	11,892	5,239	3,570	2,498	1,812	989	1,355	National Health and Welfare-	Old Age Pensions increased benefits..	9,517	996	(„)	(s) -	157	107	31	9,674	1,108	31	3,651	1,242	1,896	1,627	Trade and Commerce-	1,000	Administration, reconversion and oper-	ation of Crown Companies and/or	2,585	Production and transportation subsi-	7,062	4,662	Research and development of jet	2,000	1,500	Sundry	682	126	1,157	311	682	126	13,804	6,473	Transport	9,728	6,887	1,637	1,261	Veterans Affairs-	Treatment-Defence Forces	50,982	27,130	(*) -	(!) -	Pensions-Defence Forces	33,763	40,517	(8) -	(*) -	Additions, alterations and improve-	ments to departmental hospitals,	including land purchases	8,334	6,805	5,095	3,811	Post-discharge rehabilitation benefits	96,762	78,323	44,826	25,099	War service gratuities and re-establish-	ment credits	318,325	84,175	36,148	22,548	Sundry	273	418	1,181	1,424	508,489	287,868	87,250	52,882	Other Departments	2,255	818	593	398	Total War, Demobilization and Recon-	version Expenditure	1,314,798	634,421	425,574	468,607	Special Expenditure	Agricultural and Other Expenditure	4,434	5,253	10,489	14,787	24,436Prairie Farm Assistance Act, 1939-	Administration	333	450	402	437	425Advances to Prairie Farm Emergency	Fund	6,597	10,744	8,640	13,138	3,178Deficits-Canadian Wheat Board	20,562	31,450	4,454	4,471	2,536Subsidies on oats and barley, used as feed	13,963	Payment to Canadian Wheat Board for	distribution to producers (Dept, of	65,000Reimbursement to Canadian Wheat	Board for expenses of regulating deliv-	eries of grain-Department of Trade	and Commerce	733	128	96	77
<*) Included in ordinary expenditure.
1906	HOUSE OF COMMONS
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(thousands of dollars)
1947-48
1949-50
Estimated
Special Expenditure-Con.
Reimbursement to Canadian Commercial Corporation for expenses in purchasing materials, etc., on behalf of Dept, of National Defence-Dept, of
Trade and Commerce	
Fraser Valley, B.C. Flood Area-
Grant for emergency relief and rehabilitation	
Repairs to Federal Government structures and telegraph and telephone
lines	
Fraser Valley Dyking Board-Payments by Government of Canada
under agreement	
Protection of works	
Red River Valley and the Winnipeg Area generally-
Payments by Government of Canada under agreements for construction
of emergency works	
Grant to assist the Province of Manitoba in respect of the Red River
floods	
Grant to assist the Province of Quebec in respect of the fire at Rimouski. Grant to assist the Province of Quebec
in respect of the fire at Cabano.
Reimbursement to Defence Construction, Ltd. for expenses incurred in procuring the construction of defence projects on behalf of Dept, of National Defence	
776
5,000
4,500
1,437
3,000
1,024
2,353
12,500
1,000
500
Total Special Expenditure...
31,926
63,141
34,813
37,928
113,660
Government Owned Enterprises
Losses charged to Consolidated Deficit Account-
Prince Edward Island Car Ferry and
Terminals	
Canadian National Railways	
Canadian National (West Indies)
Steamships, Ltd	
Trans-Canada Airlines	
National Harbours Board	
8,962
15,885
1,220
33,533
1,370
2,933
1,221
42,043
4,318
1,267
3,261
1,029
1,325
Total charged to Consolidated Deficit Account....
Loans and advances non-active- National Harbours Board	
9,964
18,324
37,924
1,739
48,126 4,236
7,070
1,357
Total Government Owned Enterprises	
10,682
18,695
39,663
52,362
8,427

The Budget-Appendix
STATEMENT OF EXPENDITURES BY MAJOR CATEGORIES AND BY DEPARTMENTS FOR THE LAST FIVE FISCAL YEARS-Concluded
(thousands of dollars)
-	1946-47	1947-48	1948-49	1949-50	Estimated 1950-51$	%	$	$	%Other Charges	Write-off of assets chargeable to Con-	solidated Deficit Account- Reduction of soldier and general land	232	3	(*) -([DOT]) -	Reduction of Veterans' Land Act Loans Yearly established losses in seed grain	129	2,097	1,000	and relief accounts- Department of Resources and Deve-	54	63	45	20	23Canadian National Railways Securities	Trust Stock-reduction due to retire-	1,308	1,885	Provision for reserve for possible losses	on ultimate realization of Active	25,000	75,000	75,000	75,000	75,000Provision for reserve for conditional	benefits under Veterans' Land Act.... Assumption of part of Newfoundland	2,663	4,505	5,631	6,496	7,277debt under Terms of Union	62,293	Transfer from Capital Account to Con-	158	2,243	Write-down of Active Assets to Non-	active Assets-	1,802	Trading losses in Securities Invest-	8,299	Soldier and General Land Settlement	11,500 126	
29,386	83,711	83,919	165,536	82,300
					
Grand Total Expenditures..	2,634,227	2,195,626	2,175,892	2,448,616	2,901,844
(') Included in ordinary expenditure.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(In thousands of dollars)
Fiscal Year Ended March 31
Working Capital Advances to Crown Corporations
Canadian Arsenals, Ltd	
Canadian Commercial Corporation	
Canadian Patents and Development,
Ltd	
Canadian Wool Board	
Commodity Prices Stabilization Corporation	
Crown Assets Disposal Corporation...
Export Credits Insurance Corporation- Capital Surplus	
Loans to, and Investments in, Crown Agencies
Central Mortgage and Housing Corporation-
Loans	
Canadian Broadcasting Corporation...
Canadian Farm Loan Board	
National Harbours Board	
Railway and Steamship Companies	
Crown Plants	
Other Crown Agencies	
Other Loans and Investments
Provincial and Municipal Governments. United Kingdom and Other Governments-
United Kingdom-Loan under The War Appropriation (U.K. Financing)
Act, 1942	
United Kingdom Financial Agreement
Act, 1945-Loan	
Export Credits Insurance Act	
Other (U.K. and Other Governments) Canada's subscription to Capital of-
International Monetary Fund	
International Bank for Reconstruction
and Development	
Miscellaneous-
Loans to veterans under the Soldier Settlement and Veterans' Land
Acts	
Balances receivable under agreements
of sale of Crown Assets	
Other miscellaneous loans	
Net Total of Changes in Loans and Investments	
1947	1948	1949	1950	Estimated 1951$	S	$	$	$2,500	2,500	2,5002,500	1,000	296	Cr. 6,457	15,638	Cr. 19,341	Cr. 14,911	Cr. 3.000	Cr. 1,500Cr. 345	Cr. 108	Cr. 1,183	2,500	11,681	Cr. 14,686	Cr. 11,519	Cr. 3,887	1,00022,500	68,000	91,460	78,5002,000	1,250	4,500	600Cr. 600	99	1,050	1,950	2,000151	Cr. 26	213	20,382	900Cr. 20,521	81,717	4,067	Cr. 20,963	20,200Cr. 41,101	Cr. 14,767	2,500	4,615	Cr. 1,295	Cr. 1,200Cr. 74,838	106,790	79,195	96,034	101,000Cr. 2,530	Cr. 63,629	Cr. 5,376	Cr. 4,031	Cr. 4,300Cr. 95,800	Cr. 111,285	Cr. 29,487	Cr. 9,936	Cr. 40,500640,000	368,000	37,000	120,000	20,000267,9S3	130,934	68,196	Cr. 10,964	Cr. 23,000Cr. 165,415	Cr. 5,712	2,060	5,541	Cr. 300299,970	22,500	48,750	16,250	5,658	55,202	37,522	21,901	7,292	15,10013,503	Cr. 1,972	Cr. 1,230	Cr. 2,889	Cr. 700Cr. 10,552	Cr. 1,157	Cr. 588	Cr. 812	Cr. 6001,051,111	368,951	92,476	132,359	Cr. 34,300987,954	461,055	160,152	224,506	67,700
The Budget-Appendix
SUMMARIZED STATEMENT SHOWING SOURCES AND DISPOSITION OF CASH FUNDS FOR THE FISCAL YEAR ENDED MARCH 31, 1951 (In million of dollars)-Estimated
Cash funds made available during the year:-*
Net cash balance remaining out of current year's revenue	 642-3
Consisting of:-
Excess of revenues over expenditures for the year (i.e. budgetary
surplus)	 203-5
Add back items included in total expenditures which did not represent cash*	 482 8
686 [DOT] 3
Deduct items included in total revenues which did not represent
cash receipts*	 44-0
Increases in annuity, pension, insurance and guaranty accounts excluding
the Unemployment Insurance Fund	 21-7
Unemployment Insurance Fund-net cash contributions	 58-4
Increase in floating debt	 2-6
Repayment of departmental working capital advances-Agricultural prices
support account, etc	 16 -2
Repayment of loans and working capital advances:-
By Polymer Corporation, Ltd	 1-9
By United Kingdom Government (under 1942 Financing Act, $40-5
million less advances under 1946 Agreement Act, $20-0 million).... 20-5
By other Governments-Export Credits Insurance Act, etc	 23 -3
By Provincial and Municipal Governments	 4-3
Repayments of other loans and investments (net)	 1-3
Decrease in cash balances during 1950-51	 25-4
Disposition of cash funds:-
Reduction in sundry suspense accounts	 7-7
Increase in securities investment account	 5-2
Sinking fund purchases	 0-8
Increase in Loans and Investments:-
Advances to the Foreign Exchange Control Board	 475-0
Working capital advances to Crown Corporations (net)	 1-0
Advances to Central Mortgage and Housing Corporation (net)	 78-5
Loans to Canadian Farm Loan Board	 2 -0
Loans to Canadian National Railways	 19-9
Loan to Canadian National (West Indies) Steamships, Ltd	 0-3
Loans to National Harbours Board (net)	 0-9
Loans to other Crown agencies	 1-3
Loans under Soldier Settlement and Veterans Land Acts (net)	 15-1
Unemployment Insurance Fund-purchase of securities	 83-8
Cost of issuing new loans (portion to be amortized)	 10-0
Net reduction in funded debt	 116-4
* To calculate the amount of cash made available to the Government as a result of the current year's surplus there must be added back to the budgetary surplus figure of $203-5 million the following items included in total expenditure which did not involve current outlays of cash: provision for reserve for possible losses on ultimate realization of active assets, $75-0 million: provision for reserve for conditional benefits under the Veterans Land Act, $7-2 million; annual amortization of bond discounts and commissions, $12-5 million; transfer of value of existing stocks of weapons and equipment to a replacement fund for transfer to allied forces SI95-4 million; amount required to recoup the Agricultural Prices Support Account to cover net loss of the Agricultural Prices Support Board, $3-5 million: the Government's contributions to the following funds: civil service superannuation account, $81 -9 million; permanent services pension account. $12-0 million; unemployment insurance fund $27-9 million; Government annuities fund, S1 -5 million and the national capital fund, $2-5 million; interest on public debt credited to the following accounts- deposit and trust accounts $2-1 million; annuity, pension, insurance and guaranty accounts, $32-5 million and unmatured funded debt, war savings certificates, $2-6 million; deductions from salary payments credited to: civil service superannuation account. $12-7 million; civil service retirement fund. $7-0 million and the permanent services pension account. $6-5 million. There must also he deducted from the budgetary surplus the following items included in total revenue which did not involve current receipts of cash: premium, discount and exchange account, $18 -0 million; portion of profits of Park Steamships, Ltd. received in previous years and held in a suspense account, $10 million and an excess amount of reserve for refundable excess profits tax received in previous years and carried as a liability-funded debt. $25-0 million.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Date of Maturity	Rate Per Cent	Where Payable	Amount of Loan	Annual Interest Charge
			$ cts.	$ cts.
[Stage Direction]
19*51 May 1
[Stage Direction]
i 1
[Stage Direction]
Canada
[Stage Direction]
200,000,000 00
[Stage Direction]
1,750,000 00
[Stage Direction]
' Ang 29
[Stage Direction]
200,000,000 00
[Stage Direction]
2,000,000 00
[Stage Direction]
1
[Stage Direction]
Canada
[Stage Direction]
550,000,000 00
[Stage Direction]
5,500,000 00
[Stage Direction]
l! 31 U 11 11 3
[Stage Direction]
500,000,000 00
[Stage Direction]
8,750,000 00
[Stage Direction]
1952 Feb. 1
[Stage Direction]
Canada
[Stage Direction]
(i) 50,492,475 50 300,000,000 00
[Stage Direction]
1,624,757 88
[Stage Direction]
4,500,000 00
[Stage Direction]
300,000,000 00
[Stage Direction]
5,250,000 00
[Stage Direction]
1953 Mar. 1
[Stage Direction]
325,000,000 00
[Stage Direction]
4,875,000 00
[Stage Direction]
Mar. 1
[Stage Direction]
(3) 676,355,489 00 395,000,000 00
[Stage Direction]
20,089,767 00
[Stage Direction]
2
[Stage Direction]
7,900,000 00
[Stage Direction]
21 3
[Stage Direction]
400,000,000 00
[Stage Direction]
9,000,000 00
[Stage Direction]
(3) 855,607,410 50 [DOT]243,420,000 00
[Stage Direction]
25,414,081 50
[Stage Direction]
21 3
[Stage Direction]
6,694,050 00
[Stage Direction]
1957, May 1
[Stage Direction]
1,111,261,650 00
[Stage Direction]
33,337,849 50
[Stage Direction]
21 3
[Stage Direction]
*130,280,000 00
[Stage Direction]
3,582,700 00
[Stage Direction]
88,200,000 00
[Stage Direction]
2,646,000 00
[Stage Direction]
4
[Stage Direction]
London
[Stage Direction]
(4) 1,874,120 77 *125,420,000 00
[Stage Direction]
74,964 83
[Stage Direction]
21 3
[Stage Direction]
3,449,050 00
[Stage Direction]
1,197,324,750 00
[Stage Direction]
35,919,742 50
[Stage Direction]
21 3
[Stage Direction]
*193,410,000 00
[Stage Direction]
5,318,775 00
[Stage Direction]
1,165,300,350 00 *267,215,000 00
[Stage Direction]
34,959,010 50
[Stage Direction]
2} 31 3
[Stage Direction]
7,348,412 50
[Stage Direction]
New York
[Stage Direction]
(*) 50,160,000 00 1,315,639,200 00 («) 2,073,747 73 (*) 52,234,535 46 (*) 156,750,000 00 1,295,819,350 00
[Stage Direction]
1,630,020 00
[Stage Direction]
1962 Feb.l
[Stage Direction]
39,469,176 00
[Stage Direction]
1963, July 1
[Stage Direction]
31 3
[Stage Direction]
London
[Stage Direction]
67,396 80
[Stage Direction]
' July 1
[Stage Direction]
London
[Stage Direction]
1,567,036 06
[Stage Direction]
3
[Stage Direction]
New York
[Stage Direction]
4,702,500 00
[Stage Direction]
3
[Stage Direction]
38,874,580 50
[Stage Direction]
31 3
[Stage Direction]
Canada
[Stage Direction]
54,703,000 00
[Stage Direction]
1,777,847 50
[Stage Direction]
Canada
[Stage Direction]
1,691,796,700 00
[Stage Direction]
50,753,901 00
[Stage Direction]
2! 2f
[Stage Direction]
350,000,000 00
[Stage Direction]
9,625,000 00
[Stage Direction]
1974, Sept. 1
[Stage Direction]
New York
[Stage Direction]
(*) 104,500,000 00
[Stage Direction]
2,873,750 00
[Stage Direction]
1975j Sept. 15
[Stage Direction]
21 3
[Stage Direction]
New York
[Stage Direction]
(5) 52,250,000 00 55,000,000 00
[Stage Direction]
1,436,875 00
[Stage Direction]
1,650,000 00
[Stage Direction]
[DOT]627
[Stage Direction]
75.000.
[Stage Direction]
000 00 75.000.
[Stage Direction]
000 00
[Stage Direction]
470,250 00
[Stage Direction]
[DOT]626
[Stage Direction]
469,500 00
[Stage Direction]
[DOT]670
[Stage Direction]
75.000.
[Stage Direction]
000 00 75.000.
[Stage Direction]
000 00
[Stage Direction]
502,500 00
[Stage Direction]
[DOT]728
[Stage Direction]
546,000 00
[Stage Direction]
[DOT]754
[Stage Direction]
75.000.
[Stage Direction]
000 00 75.000.
[Stage Direction]
000 00 *22,842,000 00 *97,340,000 00
[Stage Direction]
565,500 00
[Stage Direction]
[DOT]755
[Stage Direction]
566,250 00
[Stage Direction]
Refundable portion of excess profits
[Stage Direction]
3
[Stage Direction]
Canada
[Stage Direction]
2,920,200 00
[Stage Direction]
15,027,269,778 96	390,452,444 07
			14,607,427,375 00 56,182,403 96 363,660,000 00	97-21% 0-37%
				
				2-42%
				
			15,027,269,778 96	100-00%
[Stage Direction]
(*) Redeemable at
[Stage Direction]
101
[Stage Direction]
per
[Stage Direction]
cent.
[Stage Direction]
Amount
[Stage Direction]
outstanding includes $499,925.50 redemption bonus.
[Stage Direction]
(!) Redeemable at
[Stage Direction]
101
[Stage Direction]
per
[Stage Direction]
cent.
[Stage Direction]
Amount
[Stage Direction]
outstanding includes $6,696,589.00 redemption bonus.
[Stage Direction]
(3)
[Stage Direction]
Redeemable at
[Stage Direction]
101
[Stage Direction]
per
[Stage Direction]
cent.
[Stage Direction]
Amount
[Stage Direction]
outstanding includes $8,471,360.50 redemption bonus.
[Stage Direction]
(4)
[Stage Direction]
Conversion rate
[Stage Direction]
estimated at $2-93} to
[Stage Direction]
the £ sterling.
[Stage Direction]
(5)
[Stage Direction]
Conversion rate estimated at $100 U.S. equals $104.50 Can.
[Stage Direction]
* Estimated.
[Stage Direction]
Wednesday, April 11, 1951